[Nigeria] Oando Announces Q1 2017 Results, Posts N1.7b PAT

Oando, Nigeria’s indigenous energy group listed on both the Nigerian and Johannesburg Stock Exchange, has announced unaudited results for the three months period ended 31 March, 2017, with the following highlights:

Financial Highlights:

• Turnover increased by 116%, N138.4 billion compared to N63.9 billion (Q1 2016)

• Gross Profit increased by 53%, 13.4 billion compared to N8.7 billion (Q1 2016)

• Profit-Before-Tax increased by 207%, N494 million compared to (N461 million) (Q1 2016)

• Profit-After-Tax decreased by 58%, N1.7 billion compared to N4.1 billion (Q1 2016)

• Net debt reduced by 29% N225.9 billion compared to N316.6 billion (Q1 2016)

Operational Highlights:

Upstream:

• Production in the first quarter of 2017 decreased to 3.4 MMboe (average 38,125 boe/day) compared to 4.5 MMboe (average 49,365 boe/day) in the first quarter of 2016

• Approximately 66% of crude production was hedged with 9,590 bbls/day of crude oil production hedged at $65/bbl (average) with expiries ranging from July 2017 to January 2019 and further upside if certain price targets are met

Midstream:

• Concluded the sale of Alausa Power Plant for a transaction price of N4.6 billion

Downstream:

• 150% growth in crude and refined product volumes compared to Q1 2016

• Increase in turnover to N115.6 billion compared to N4.3 billion in Q1 2016

• Increase in secured credit lines by N76.6 billion to a total of N214.4 billion

With Brent crude price at $50.74 per barrel and attacks on oil facilities in the Niger Delta, the business environ remains challenging. Vandalism of oil infrastructure led to oil wells being shut-in, decreased production and a downturn in profit. Oando Energy Resources (OER) recorded a production shortfall due to significant reductions in gas production and delivery caused by a ruptured Gas Transmission System (GTS-4) gas line at OMLs 60 to 63. In addition, the Trans Forcados pipeline continued to suffer downtime resulting in reduced production from its Ebendo field. Despite these operational challenges, the Group recorded a N1.7 billion profit in its first quarter due to lower production expenses, decreased finance costs and higher oil prices.

Commenting, Mr. Wale Tinubu, Group Chief Executive, Oando PLC said: “Following a successful restructuring in 2016, we are pleased with our Q1 2017 results which reflect a return to normalcy and growth in spite of continued security challenges, economic headwinds and a fluctuation in crude prices. We remain steadfast in the focused implementation of our strategy of Growth across our operations; Deleverage through the divestment of non-performing assets; and Profitability, by focusing on dollar denominated export earnings.

In the Upstream, production in the first quarter of 2017 decreased to 38,125 boe/day compared to 49,365 boe/day in Q1 2016. However, due to decreased production expenses Oando Energy Resources (OER) recorded a profit of N4.96 billion in the first quarter of 2017 compared with a profit of N815.5 million in the prior year comparative period. In the Midstream following the partial divestment of Oando Gas and Power (OGP) to Helios Investment Partners, we successfully concluded the sale of Alausa IPP for a transaction price of N4.6 billion. In the Downstream, our trading business through Direct Sale & Direct Purchase (DSDP) and Offshore Processing Agreement (OPA) yielded N115.6 billion compared to N4.4 billion in 2016.  The company also increased traded volumes by 150% and revenue by 1718%. The first quarter earnings from OER and OTD underscore our proactive decision to focus on our dollar denominated export businesses.

Our resilience is evident in our capacity to grow via a diversified model, and as we continue to chart our deliberate path in this challenging business environment, we look forward to better performance in the quarters to come.”

www.oandoplc.com