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Oando Plc Posts N330 Billion Top Line Revenue in YTD September 2016 Results

Proshare

Tuesday, November 1, 2016 2:09 PM / NSE

Oando PLC (referred to as “Oando” or the “Group”), Nigeria’s leading indigenous energy group listed on both the Nigerian and Johannesburg Stock Exchange, today announced unaudited results for the six months period ended 30 September, 2016, with the following highlights:

Financial Highlights
• Turnover increased by 26%, N330.0 billion compared to N262.0billion (YTD Sept 2015)

• Gross Profit decreased by 52%, N28.7 billion compared to N60.0 billion (H1 2015)

• Loss-After-Tax decreased by 25%, (N35.9 billion) compared to (N47.6 billion) (H1 2015)

Operational Highlights

Upstream
• Oando Energy Resources (OER) during the nine months ended September 30, 2016 recorded a production of 12.0 MMboe (average 43,617 boe/day)

Midstream
Oando Plc signs definite agreement to divest 49% voting rights in Oando Gas & Power (OGP) to Helios Investment Partners for $115.8 million

• OGP Achieved 59% Completion in Central Horizon Gas Company (CHGC) Pipeline Expansion Project

• OGP Achieved 93% Completion in Greater Lagos 4 Project
The Nigerian economic environment continues to impact our business as we witnessed a further devaluation of the Naira during Q3, 2016, from an average exchange rate of N280.00:$1.00 in Q2 to an average of N316.00:$1.00 in Q3 2016, this has resulted in further foreign exchange losses due to an impairment of our dollar denominated receivables.

For the major part of the year we have faced operational challenges due to the unrest in the Niger Delta, however we find comfort in The Nigerian Government’s discussions and engagement in the region, indicating a possible resolution and as thus we expect our production levels to stabilise and gradually incline in the coming months.

Despite these economic challenges, we must highlight our achievements in the 3 rd quarter as witnessed by the improvement in our top line revenue as a result of our new business model of a diversified business with higher weighted dollar earnings in both the Upstream and International Trading businesses.

This drove revenues up by 96% and led to significant foreign exchange gains between the second and third quarters.

Commenting, Mr. Wale Tinubu, Group Chief Executive, Oando PLC said: “The third quarter witnessed the FGN establish a seize fire with the militants responsible for production disruptions in the Niger Delta, leading to stabilised daily productions from our assets and expectations of imminent increases to our 2015 production highs of 56kbbls/day. We have also been proactive in our cost management initiative to ensure maximised value extraction for every barrel of oil produced as the global oil price still lingers below $50/bbl. We are pleased to have executed a SPA with Helios Investment partners for ~$116 million, representing 49% legal voting rights in the company’s midstream business, of which the proceeds of the divestment will be utilised towards the company’s debt restructuring initiative. The trading business has grown significantly this quarter having exported over 14 cargoes of crude with volumes exceeding 14mmbbls and an additional 8 cargoes of other oil based products. Our business model of dollar denominated earnings is taking shape as evidenced from the increased revenue line and future increases from the Upstream business through production and export trading businesses through increased lifting’s, whilst focusing on reduced costs to ensure profitability through these streams.”

Operational Update Oando PLC successfully concluded the recapitalization and partial divestment of Oando Downstream for $210 million.

Oando Energy Resources (OER) had an average production of 41,094 boe/day compared to 53,169 boe/day in the third quarter of 2015, this reduction was mainly due to the disruptions in the Niger Delta. 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 2 years.

Our trading business, Oando Trading Dubai (OTD) posted revenues of N64.9bn in Q3 from lifting volumes exceeding 14mmbbls from 14 cargoes of crude and an additional 8 cargoes of other petroleum products.

In September 2016, Oando PLC signed a definitive agreement with Helios Investment Partners to divest 70% economic rights in Oando Gas and Power. The agreed transaction consideration of US$ 115.8 million is conditional upon the receipt of regulatory approvals and subject to customary purchase price adjustments. Upon completion, 49% of the voting rights in OGP would be retained by Oando, while Helios Investment Partners will hold 49% and the residual 2% will be held by a local entity.

Oando Gas & Power (OGP) as at H1 2016, achieved 59% completion of the Central Horizon Gas Company 8.5 km pipeline expansion project, the pipeline, which is set to be completed in the fourth quarter of 2016, and will increase the throughput capacity by 400%, thereby providing increased supply of gas in the South-East region of Nigeria.

During the 3rd Quarter 2016, Oando Gas and Power connected 7 new customers to the pipeline network of GNL. These customers are expected to increase GNL’s gas volume sales in 2016. The business also connected 3 new major customers in GNSL, with significant increase in monthly volume sales performance.

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