By Peter Egwuatu
OANDO Plc has reduced its net debt by 29 per cent to N225.9 billion in the first quarter 2017 (Q1’17), ended March 31, from N316.6 billion in the corresponding period of 2016, just as Profit After Tax, PAT dropped by 59 per cent to N 1.7 billion from N 4.1 billion.
According to the Q1, 2017 result released on the Nigerian Stock Exchange, NSE the company’s turnover grew by 575 per cent to N138.4 billion from N20.5 billion recorded in the corresponding period of 2016, while its gross profit increased to N 13.4 billion from N 2.6 billion. The Loss\Profit before Tax, reduced to N647 million from N20.7 billion in 2016.
Through its upstream subsidiary, Oando Energy Resources (OER) the company has consistently adopted a hedge mechanism that ensures the business is protected from fluctuating oil prices. Approximately 66 per cent of the company’s 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.
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.”
The company has continued to reduce its net debt quelling any concerns of critiques; as at March 2017 it stands at N225.9 billion a 29% reduction fromN316.6 billion in March 2016.
“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.” Tinubu said.
In the Upstream 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, OER recorded a 608% increase in profits; N4.96 billion in the first quarter of 2017 against a profit of N815.5 million for same period in 2016.