Oando Plc has posted a profit after of N4.6 billion in first quarter of 2019 and the company start the year on a good note.
The indigenous energy solutions provider published its unaudited for the period ended March 31, 2019 with the announcement of a third consecutive year of profits.
The company continues to wax strong posting results for the Q1, with profit after tax of N4.6 billion, which is an 11 per cent increase from Q1, 2018, despite the volatile nature of the sector and economy.
In a statement to LEADERSHIP, Oando said it continues in its unrelenting drive, working assiduously to restore stakeholders’ confidence in its promise to return economic value to shareholders in the very near future.
The company said it has leveraged on the increase in the price of crude oil which peaked at a little over $66 per barrel in the first quarter of the year, $3 more than the projected average for 2019, saying that the current stability in oil pricing has also tilted in the favour of the Nigerian economy as the government predicted a $60 per barrel price in the 2019 budget.
An in-depth analysis of the company’s financials revealed that its turnover grew by 12 per cent to N168 billion from N150.6 billion in Q1 2018, profit-after-tax increased by 11 per cent to N4.6 billion compared with N4.2 billion in Q1 2018.
The Group also decreased its total borrowings by five per cent to N200.9 billion compared to N210.9 billion in full year, 2018 while its long term borrowing decreased by one per cent to N75.8 billion compared to N76.8 billion in full year, 2018.
These figures reflect an increase in production by 11 per cent at 43,745boe/day compared to 39,556boe/day in the same period of 2018 in Oando’s upstream subsidiary. The company’s production activities also revealed that oil production increased by 13 per cent from 14,823bbls/day in Q1 2018 to 16,815bbls/day in Q1 2019, whilst natural gas production increased by 18 per cent from 124,910mcf/day in Q1 2018 to 147,163mcf/day in Q1 2019.
Despite its partial divestment from its marketing subsidiary the company continues to increase its market share in the downstream sector through its trading business, Oando Trading which recorded an 11 per cent increase year-on-year, driven by a strong performance in its crude oil trading division and a three per cent increase in turnover to $312 million, from $301 million.
Speaking on the company’s financials, the Group chief executive, Wale Tinubu said, “Our results reflect the progress made over the last few quarters and provides an indication of our expectation for the year. Now that our debt profile is down by 78 per cent from $2.5billion as of December 2014 to $558million, and our de-leverage program is 90 per cent complete with most of our non-core operations divested for good value, we can now focus on steady growth in our upstream entity.’’
“In addition to its positive results Oando has recorded a few milestones in the quarter under review, notably its recent divestment of its 25 per cent residual interest in Axxela Limited to Helios Investment, a leading private equity firm with a focus on investments in Africa, signifying a complete divestment from its midstream business.
“The total selling price for its 25 per cent interest was $41.5 million creating real value from a non-core business activity of the Group,” Tinubu said.
He stated that the move speaks volumes of Oando’s willingness to restructure its business for increased revenue generation by focusing on its dollar-earning businesses, Oando Energy Resources (OER), its exploration and production subsidiary, and Oando Trading its trading business.
On the full divestment from Axxela, Tinubu said, “The completion of this divestment signifies another win for the company. We pioneered the development of Nigeria’s foremost natural gas distribution network which has subsequently grown to become the largest private sector gas distributor in Nigeria creating a lasting impact on both the sector and the Nigerian economy.”
He said that the divestment further reinforces Oando’s ability to create value that can be monetized and the company’s status as the indigenous partner of choice for international companies looking to invest in Nigeria, noting that “This transaction favourably positions us to significantly reduce our debt profile and remain focused on growth through our dollar denominated businesses.”
Speaking on the outlook for the rest of the year, Tinubu said, “With ICE Brent Crude Oil price currently at a decent level of USD74.48 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.”
“Oando could be rightfully said to be unrelenting in creating value not for itself and its shareholders but for the country at large. If all indices remain in the company’s favour, the company would be well on its way to ending 2019 on a positively high note and possibly paying shareholders long awaited dividends,” he said.
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