Oando posts N35.9 billion post-tax loss, 26 per cent revenue increase

Oando Plc on Monday announced a N330 billion increase in its revenue for the year ended September 2016 despite harsh operational environment.
The indigenous Nigerian energy group listed on both the Nigerian and Johannesburg Stock Exchange, said its unaudited results for the half-year period ended September 30, 2016, showed 26 per cent increase, from N262 billion recorded in the corresponding period last year.
Further highlights of the report showed gross profit declined by 52 per cent, from N60 billion in the corresponding half year period last to N28.7 billion.
However, loss-after-tax, which stood at about N47.6 billion last year decreased by 25 per cent, to about N35.9 billion during the reporting period.
A sectoral review of the company’s operations showed a 20 per cent drop in total production by Oando Energy Resources (OER) in the upstream sector of the industry during the nine months period ended September 30, 2016.
Total production was 12 million barrels of oil equivalent (BOE), averaging 43,617 BOE per day, compared to 15.1 MMBOE (average 55,154 BOE per day)Details of activities during the year showed that the company signed a definite agreement to divest 49 per cent of voting rights in Oando Gas & Power (OGP) to Helios Investment Partners for $115.8 million.
With the completion of the transaction, the OGP realized 59 per cent completion in Central Horizon Gas Company (CHGC) Pipeline Expansion Project and 93 per cent completion in greater Lagos 4 Project.
In the downstream sector, the company said Oando Trading business recorded significant progress through the exportation of Nigerian crude oil and refined petroleum products, with over 11 million barrels of crude oil, 213,000 metric tons of refined petroleum products exported during the period under review.
About N64.9 billion was realized in the third quarter from lifting volumes exceeding three million barrels of crude and an additional 300,000 MT of refined petroleum products.
The company successfully concluded the recapitalization and partial divestment of Oando Downstream for $210 million.
The company however noted the negative impact of the Nigerian economic environment on its business, citing the pressures by devaluation of the Naira in the third quarter of 2016.
From an average exchange rate of N280 to the dollar in the second quarter, the company said the exchange rate of the Naira to the dollar rose to an average of N316 in the third quarter, resulting in a net foreign exchange loss of N5.4 billion.
Although the company said it faced major operational challenges for the most part of the year as a result of the crisis in the Niger Delta region, it said it however found comfort in government’s discussions and engagement with leaders in the region to restore peace.
Despite these challenges, it attributed the improvement in its revenue to a new business model of a diversified business portfolio in both the upstream and international trading businesses.
Group Chief Executive, Wale Tinubu, said with the ceasefire brokered by the federal government with militants in the Niger Delta, the expectation was that incidents of production disruptions in the region would cease, leading to stabilized daily productions from its assets in the region.
Mr. Tinubu said the company expects increases to its 2015 production figure of 56,000 barrels per day, despite the lingering decline in global oil price.
“Notwithstanding, the corporation continues to shrink its debt burden as witnessed by a reduction in debt from $900 million post acquisition in 2014 to $407 million today, signifying a total pay down of over 50% in two years,” Mr. Tinubu said.
With 59 per cent completion of the 8.5 kilometres Central Horizon Gas Company pipeline expansion project, he said the throughput capacity would be increased by 400 per cent, to enable increased gas supply in the South-East region.
The pipeline schedule to be completed in the fourth quarter of 2016, would increase OGP, connect seven new customers to the pipeline network of GNL and increase its gas sales volume in 2016.
Three new major customers in GNSL, with significant increase in monthly volume sales performance, were also connected to Oando PLC network.