Economy
Oando Cuts Debt Levels by 8%, Raises PAT by 26% in Q3
By Modupe Gbadeyanka
The management of Oando Plc under the leadership of Mr Wale Tinubu has continued to show that he has the ability to turnaround fortunes of the leading indigenous energy group in Nigeria.
The energy firm, listed both on the Nigerian and Johannesburg Stock Exchange, announced its unaudited results for the nine months period ended September 30, 2019 and from the highlights, it declared a 26 percent rise in profit after tax, which went up to N13.1 billion from N10.4 billion despite the total generated revenue going down by 18 percent to N413.8 billion from N505.1 billion, with the operating profit going down by 31 percent to N19.8 billion from N28.7 billion.
However, due to the strategies mapped out by the board and management, Oando was able to reduce its total borrowings by 8 percent to N193.1 billion from N210.9 billion, while the production increased by 8 percent to 43,045boe/day from 40,039boe/day.
This was driven by an 11 percent increase in natural gas production (from 120,047mcf/day YTD September 2018 to 133,415mcf/day YTD September 2019) and an 8 percent increase in crude oil production (from 16,850bbls/day YTD September 2018 to 18,147bbls/day YTD September 2019).
In YTD September 2019, Oando Trading traded approximately 9.3 million barrels of crude oil under various contracts with the Nigerian National Petroleum Corporation (NNPC) and delivered 317,649MT of refined products.
It incurred capital expenditure of $84.3 million in the nine months of 2019 compared with $59.3 million in same period in 2018. This consists of $77.3 million at OMLs 60 to 63, $5.6 million at OML 56, and $1.4 million on other assets.
During the year, the company, in conjunction with its JV partners, aggressively ramped up its drilling program towards increasing oil revenue and meeting gas obligations and as at September 2019, it has successfully completed a side track at OML 56, shoring up net production by nearly 1,500bbls/day, whilst also drilling and completing five wells across three rig lines at its joint venture operations on OMLs 60-63.
Recall that last month, Oando announced that the NNPC/NAOC/OANDO Joint Venture (of which Oando Energy Resources [OER] holds a 20 percent working interest) had made a significant gas and condensate find in the deeper sequences of the Obiafu-Obrikom fields in OML 61, onshore Niger Delta.
Preliminary evaluation indicates that the find amounts to about 1 trillion cubic feet of gas and 60 million barrels of associated condensate in the deep drilled sequences.
The well can deliver in excess of 100 million standard cubic feet/day of gas and 3,000 barrels/day of associated condensates. The discovery is part of a drilling campaign planned by the Joint Venture aimed at exploring near-field and deep pool opportunities as immediate time to market opportunities.
The JV started gas and condensate production from the Obiafu-41 discovery just 3 weeks after completion and the gas from this discovery will largely be channelled to the domestic market in order to feed the power sector.
Oando said the full impact of this discovery will be determined and communicated to the market on conclusion of the next annual independent reserves and resources evaluation.
Commenting on the results, Mr Tinubu said, “In the period under review, we made substantial progress on our top priority of operational growth and recorded an 8 percent increase in hydrocarbon production.
‘In conjunction with our partners, we successfully completed an ambitious 6-well drilling program, the results of which have been positive, and are particularly excited about the discovery of a significant gas and condensate find at a field in OML 61 of our Joint Venture.
“This has had a major impact on our reserves and consequently future cash flows. Production has since commenced in October on the completed wells, and the gas will largely be channelled to feed the nation’s power sector through our Joint Venture’s Okpai Power plant, Nigeria’s first independent power plant.
“In addition, we achieved an 8 percent reduction in our debt levels, whilst growing free cash flows. Over the last quarter of the year, our focus will be on the completion of our drilling program as well as tie-in of the new discoveries.”
By Dipo Olowookere
A 1.08 per cent growth was further printed by the Nigerian Exchange (NGX) Limited on Friday on improved appetite for Nigerian stocks.
Data showed that the insurance sector lost 0.61 per cent yesterday due to profit-taking as the energy space gave up 0.08 per cent, while the commodity counter closed flat.
However, the industrial goods landscape appreciated by 2.06 per cent, the banking index improved by 1.31 per cent, and the consumer goods sector expanded by 0.83 per cent.
At the close of business on Customs Street, the All-Share Index (ASI) increased by 1,563.92 points to 147,040.07 points from 145,476.15 points and the market capitalisation went up by N996 billion to N93.722 trillion from N92.726 trillion.
UAC Nigeria led the advancers’ log yesterday after it grew by 10.00 per cent to N96.80, Transcorp Hotels jumped by 9.71 per cent to N172.80, Royal Exchange appreciated by 8.89 per cent to N1.96, Ikeja Hotel soared by 8.74 per cent to N31.10, and Veritas Kapital leapt by 8.07 per cent to N1.74.
On the flip side, Union Dicon declined by 10.00 per cent to N6.30, ABC Transport slipped by 9.88 per cent to N3.10, AXA Mansard depreciated by 7.19 per cent to N12.90, FTN Cocoa lost 4.62 per cent to trade at N4.75, and Guinea Insurance dropped 3.36 per cent to finish at N1.15.
A total of 38 stocks ended on the gainers’ table and 17 stocks finished on the losers’ table, representing a positive market breadth index and strong investor sentiment.
Traders transacted 361.6 million equities for N14.8 billion in 21,051 deals yesterday versus the 1.9 billion equities worth N19.2 billion traded in 23,369 deals a day earlier, showing a decline in the trading volume, value, and number of deals by 80.97 per cent, 22.92 per cent, and 14.20 per cent, respectively.
The busiest stock for the session was Zenith Bank with 59.5 million units worth N3.6 billion, Access Holdings traded 46.1 million units valued at N973.0 million, Fidelity Bank exchanged 29.4 million units for N560.4 million, FCMB transacted 27.9 million units worth N293.9 million, and Tantalizers sold 13.0 million units valued at N29.8 million.
By Adedapo Adesanya
Energy stocks influenced the 4.76 per cent loss recorded by the NASD Over-the-Counter (OTC) Securities Exchange on Friday, December 5.
The culprits were the duo of 11 Plc and Nipco Plc,with the former shedding N32.17 to end at N291.83 per share compared with the previous day’s N324.00 per share, and the latter down by N21.00 to sell at N195.00 per unit versus the previous session’s N216.00 per unit.
Consequently, the NASD Unlisted Security Index (NSI) slumped by 170.16 points to 3,401.37 points from 3,571.53 points and the market capitalisation lost N101.81 billion to close at N2.035 billion from the N2.136 trillion quoted in the preceding session.
The OTC securities exchange suffered the decline yesterday despite the share prices of three companies closing green.
Central Securities Clearing System (CSCS) Plc was up by N1.80 to close at N39.80 per share compared with Thursday’s price of N38.00 per share, Air Liquide Plc appreciated by N1.09 to N11.99 per unit from N10.90 per unit, and FrieslandCampina Wamco Nigeria Plc grew by 78 Kobo to N56.57 per share from N55.79 per share.
During the session, the volume of transactions rose by 6,885.3 per cent to 18.2 million units from 4.3 million units, the value of transactions ballooned by 10,301.7 per cent to N389.7 million from N347.2 million, but the number of deals declined by 29.7 per cent to 26 deals from 37 deals.
Infrastructure Credit Guarantee Company (InfraCredit) Plc ended the day as the most traded stock by value on a year-to-date basis with 5.8 billion units worth N16.4 billion, followed by Okitipupa Plc with 170.4 million units valued at N8.0 billion, and Air Liquide Plc with 507.5 million units worth N4.2 billion.
InfraCredit Plc also finished the day as the most traded stock by volume on a year-to-date basis with 5.8 billion units transacted for N16.4 billion, followed by Industrial and General Insurance (IGI) Plc with 1.2 billion units sold for N420.2 million, and Impresit Bakolori Plc with 536.9 million units worth N524.9 million.
By Adedapo Adesanya
The Naira depreciated further against the US Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Friday, December 5, as FX demand pressure mounts.
The Nigerian currency lost N2.60 or 0.18 per cent against the greenback to close at N1,450.43/$1 compared with the previous day’s N1,447.83/$1.
Equally, the domestic currency declined against the Pound Sterling in the official forex market during the session by N4.48 to trade at N1,935.45/£1, in contrast to Thursday’s closing price of N1,930.97/£1 and shrank against the Euro by 43 Kobo to end at N1,689.17/€1 versus the preceding session’s rate of N1,688.74/€1.
Similarly, the local currency performed badly against the US Dollar at the GTBank FX counter by N2 to close at N1,455/$1 versus Thursday’s N1,453/$1 but traded flat at the parallel market at N14.65/$1.
As the country gets into the festive period, pressure mounted on the local currency reflecting higher foreign payments and lower FX inflows.
However, there are expectations that the Nigerian currency will be stable, supported by interventions by to the Central Bank of Nigeria (CBN) in the face of steady dollar Demand and inflows from Detty December festivities that will give the Naira a boost after it depreciated mildly last month.
Traders cited by Reuters expect that the Naira will trade within a band of N1,443-N1,450/$1 next week, buoyed by improved FX interventions by the apex bank.
As for the crypto market, it was down yesterday due to profit-taking associated with year-end trading. However, the December 1-Year Consumer Inflation Expectation by the University of Michigan fell to 4.1 per cent from 4.5 per cent previously and 4.5 per cent expected. The 5-Year Consumer Inflation Expectation fell to 3.2 per cent from 3.4 per cent previously and 3.4 per cent expected.
With the dearth of official economic data of late, these private surveys have taken on a new level of significance and the market banks of them to make decisions.
Cardano (ADA) depreciated by 5.7 per cent to $0.4142, Dogecoin (DOGE) slid by 5.1 per cent to $0.1394, Ethereum (ETH) dropped by 3.9 per cent to $3,039.75, Solana (SOL) declined by 3.8 per cent to $133.24, and Litecoin (LTC) fell by 3.7 per cent to $80.59.
Further, Bitcoin (BTC) went down by 2.6 per cent to sell at $89,683.72, Binance Coin (BNB) slumped by 2.2 per cent to $883.59, and Ripple (XRP) shrank by 2.1 per cent to $2.04, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.
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