We’ll Resume Dividend Payments Soon–Oando Assures Shareholders
By Dipo Olowookere
If there is one thing shareholders of Oando Plc have longed for, it is the payment of dividend, which is a form of reward for their support for the company.
For many years, the board of directors of the energy firm has not paid cash dividend to shareholders because of some issues the company has been battling with, including debts and corporate governance issues.
But if words of the Group Chief Executive Officer of Oando, Mr Adewale Tinubu, can be taken to a bank, then shareholders will soon begin to smile again.
Last Friday, the company released its financial statements for the year ended December 31, 2018 and while commenting of the performance, Mr Tinubu said things will soon begin to improve and get better.
“Our 2018 results demonstrate the solid foundation we have built across volatile commodity price cycles, and our ability to deliver profitability despite a challenging local operating environment.
“Over the last few years, we have developed a reliable platform for future growth through the execution of a corporate strategy designed to streamline our operations, reduce our debt and optimize our asset portfolio.
“Our asset base is delivering strong free cash flows as evidenced by a 70% reduction in our Upstream Borrowings since the closure of our landmark acquisition of ConocoPhillips’s Nigerian asset in 2014.
“We remain confident in our ability to deliver significant value to shareholders in the years ahead as well as resuming our dividend payments,” Mr Tinubu was quoted as saying in a statement released by the energy group.
An analysis of the results showed that revenue for the period was N679.5 billion, an increase of 37% compared with N497.4 billion raked in the same period in 2017. This was primarily driven by an increase in commodity prices and higher oil production.
In the twelve months to December 31, 2018, gross sales price for oil increased by 33% to $69.44/bbl from $52.10/bbl in the same period in 2017. Sale price for natural gas increased by 27%, whilst NGL declined by 4%.
Also, Gross Profit for the period was N96.3 billion, an increase of 9% from N88.1 billion recorded in the same period in 2017. The increase is primarily driven by higher revenue as a result of higher commodity prices and higher oil production
In the period under review, the Profit-After-Tax grew by 46 percent to N28.8 billion from N19.8 billion in 2017. The growth was primarily driven by higher revenue as well as income tax credits.
Total Group Borrowings for the period stood at N210.9 billion, an 11% decrease from FYE 2017 (N237.4 billion) whilst in our upstream specifically, our borrowings reduced by 21% to $255.6 million compared to $324.6 million in FYE 2017. Since FYE 2014, the Group has reduced its debt by 55% from N473.3 billion while our upstream borrowings have reduced by approximately 70% from $801.6 million in 2014 to $260 million (FYE 2018).
Looking ahead, Oando said its upstream business will continue to pursue production growth initiatives through strategic alliances, whilst ensuring operational efficiency and fiscal prudence because Brent averaged $62 per barrel in the first quarter of 2019, with room for a further upside supported by OPEC’s 1.2 million b/d cut.
“Our Trading business will continue to solidify its position in Nigeria and carry out growth initiatives, whilst exploring opportunities for expansion across Africa.
“The Group as a whole remains focused on driving profitability via growth in our upstream business and achieving further reduction of borrowings to ensure value accretion to shareholders,” the company stated.