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Oando reports full-year profit on divestment from subsidiaries

04 Apr 2017
Financial Nigeria

Summary

The company said after-tax profit stood at N3.5 billion compared to an after-tax loss of N47.6 billion in 2015.

Wale Tinubu, Group CEO, Oando Plc

Oando, a leading Nigerian oil and gas company, reported today that it recorded a profit in its full year 2016 financial statement. The company said after-tax profit stood at N3.5 billion compared to an after-tax loss of N47.6 billion in 2015.

The profit growth was driven mainly by the inclusion of earnings from discontinued operations in gas and power, energy services and marketing, and refining and terminals during the period under review.

In July last year, Oando raised $210 million from Helios Investment Partners and Vitriol Group by selling a 49 percent stake in Oando Downstream, the company’s loss-making downstream operations that includes Oando Marketing, Oando Supply & Trading, Apapa SPM, and Oando Trippmart.

Oando also sold 49 percent of the voting rights in its gas and power business, Oando Gas and Power, to Helios Investment Partners in September last year for $115.8 million.

When earnings from discontinued operations are excluded, Oando recorded an after-tax loss from continuing operations of N25.8 billion compared to a loss of N34.9 billion a year earlier.

“2016 saw the country plunge into a recession, the first in over two decades, besieged with liquidity constraints, devaluation of the naira and a slump in oil earnings due to low oil prices intensified by the insurgency in the Niger Delta,” said Wale Tinubu, Oando’s Group CEO. We were proactive in the timely execution of our restructuring programme of growth in our upstream division; deleverage, through divestments resulting in a net debt reduction of N125 billion; and profitability by focusing on dollar denominated earnings.”

Oando said revenue from continuing operations rose markedly by 124 percent to N455.7 billion compared to N203.4 billion driven mainly by increased income from supply and trading of crude oil. Owing to the Niger Delta crisis and the decline in oil prices, Oando said revenue from exploration and production fell by 14 percent to N77.2 billion as against N89.7 billion in 2015.

Oil production also declined to 43,503 barrel of oil equivalent per day (boepd) from 54,520 boepd in the previous year. Proven and probable reserves, however, increased by 5 percent to 469.3 million boe from 445 million boe in 2015 due to reservoir performance.

“We are hopeful that the federal government will establish a long term resolution to the conflict in the Niger Delta, which will positively impact the oil and gas industry, consequently ramping up our daily production,” Tinubu said.

Oando said it had cash and cash equivalents of N10.4 billion at year-end compared to a negative cashflow of N16 billion in 2015 due mainly to proceeds from longterm borrowings. In June last year, Oando struck a deal with 10 Nigerian banks to restructure the company’s loans worth up to N94.6 billion.

Basic loss per share from continuing operations fell to N2.15 per share in 2016 from N2.94 per share in the previous year. The company did not declare a dividend.

Oando’s stock rose by 5 percent to close at N5.25 per share at the Nigerian Stock Exchange on Tuesday.


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