What next for Oando Plc Investors

Proshare

Monday, August 04, 2014 12.23 PM / Sriram Sekhar / The Analyst

 

Oando Plc, is one of the largest integrated energy solution providers in Nigeria with a primary focus on oil and gas exploration and production within the country. The Oando group consists of six companies vertically integrated into the entire value chain of both downstream and upstream activities.

 

The company recently completed its $1.65bn acquisition of ConocoPhillips' Nigerian assets, effectively transforming the company into one of the largest local oil producers.

 

Oando's capacity will increase by approximately 10x to 50,000 barrels a day; the only other Nigerian company that is on par with Oando's new size is SEPLAT Plc.

 

One of the main reasons for the sale of oil assets by global majors is the threat of violence, insecurity and political instability in the African continent. This however, is not a substantial concern to homegrown companies such as Oando Plc. The entrance of foreign investors such as Temasek (The Government of Singapore's sovereign wealth fund), looking to invest in these assets, bode well for the future of the sector, especially for the domestic companies looking to cash in on the retreat by the global majors.

 

Oando is likely to continue building on its position as one of the leaders in the oil & gas industry, and we expect the company to grow both organically and inorganically going forward. Though the firm's financial performance has recorded a fall in the half year 2013, we expect that its turnaround is imminent in the coming years.

 

In our view, this is a good sign for Oando investors, as there seems to be growth on the horizon, after a long period of wait, doubt and hope.

 

We believe that new investors can invest in the company at this time/level, and existing investors can hold or add on to their positions. However, keep in mind that this will be a long term investment and one cannot expect overnight returns from a company which operates in a capital intensive, long lead industry like Oil & Gas.



 

For further details contact coo@proshareng.com  

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