Dipo Olowookere
By Dipo Olowookere
Group Chief Executive Officer of Oando Plc, Mr Wale Tinubu, has disclosed that the indigenous energy group listed on both the Nigerian and Johannesburg Stock Exchange, will now focus on increasing oil production so as to sustain profitability.
Speaking today on the performance of the company in the first quarter of 2019, the lawyer turned boardroom expert said, “With ICE Brent Crude Oil price currently at a decent level of $74.48 per barrel, our efforts will be geared towards increasing our production to sustain profitability and position us on the path to resumption of dividend payment to our shareholders.”
During the three months ended March 31, 2019, production increased by 11% at 43,745boe/day, compared with 39,556boe/day in the same period of 2018. Oil production in particular increased by 13% from 14,823bbls/day in Q1 2018 to 16,815bbls/day in Q1 2019, whilst natural gas production increased by 18% from 124,910mcf/day in Q1 2018 to 147,163mcf/day in Q1 2019.
Capital expenditure of $19.3 million (N7.0 billion) was incurred in the three months of 2019 compared to $6.6 million (N2.4 billion) in same period in 2018. This consists of $18.5 million (N6.7 billion) at OMLs 60 to 63, $0.5 million (N180.8 million) at OML 56, and $0.3 million (N108.5 million) on other assets.
In Q1 2019, Oando Trading traded approximately 3.8 million barrels of crude oil under various contracts with the Nigerian National Petroleum Corporation (NNPC) and delivered 103,720 MT of refined products. Our trading business continues to solidify its relationships with leading international and local banks, maintaining sizeable and well diversified structured Trade Finance facilities required to support future growth.
Commenting further on the performance of the company, Mr Tinubu said, “Our results reflect the progress made over the last few quarters and provides an indication of our expectation for the year.”
He said, “Now that our debt profile is down by 78% from $2.5 billion as of December 2014 to $558 million currently, and our de-leverage program is 90% complete with most of our non-core operations divested for good value, we can now focus on steady growth in our upstream entity.”
In the period under review, the company’s revenue was N168.0 billion, an increase of 12% compared to the same period in 2018 (N150.6 billion) primarily driven by an 11% increase in production, and an 11% growth in traded volumes compared to prior year.
In addition, operating Profit for the period was N17.1 billion, an increase of 15% compared to the same period in 2018 (N14.9 billion). This was primarily driven by higher revenue as well as the profit realized on the disposal of our residual interest in Axxela Limited.
Profit-After-Tax for the period was N4.6 billion, an increase of 11% compared to the same period in 2018 (N4.2 billion). This was primarily driven by a 15% increase in Operating Profit.
Total Group Borrowings for the period stood at N200.9 billion, a 5% decrease from FYE 2018 (N210.9 billion) whilst in our upstream specifically, our borrowings reduced by 8% to $234.3 million compared to $255.6 million in FYE 2018. Since FYE 2014, the Group has reduced its debt by 58% from N473.3 billion while our upstream borrowings have reduced by approximately 71% from $801.6 million in 2014 to $234.3 million (Q1 2019).
Oando said looking ahead, it expects prices to remain at their current levels in the near term. Oil prices have recovered to over $74 per barrel as at the end of April 2019 after reaching a low of just over $50 per barrel at the end of 2018.
“As a business, our focus will be largely on driving profitability via growth in our upstream business and achieving further reduction of borrowings.
“In the upstream, we will pursue production growth initiatives through strategic alliances, whilst ensuring operational efficiency and fiscal prudence. We will also continue to work with our partners to achieve cost optimization on our Joint Venture operations, ensuring the gains from higher revenues are not lost to increasing operating costs.
“Our trading business’s primary focus will be geared towards growing our existing market share in Nigeria while leveraging on our relationships with international financiers,” the firm said.
