Oando says it has reduced debt by $125bn

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Segun Edwards

Amidst the country’s macro-economic challenges Oando Plc, Nigeria’s largest indigenous energy group said it has has reduced its whooping debts

It said the successful implementation of some initiatives evident in the company’s FYE 2016 results, saw a N3.5 billion profit-after-tax, a 107% increase from the loss of its 2015 financial year activities.

The company said a review of its 2016 year ended results further show positive performance across all financial indices, with turnover increasing by 49 per cent to N569 billion from N382 billion in FYE 2015, while EBITDA increased by 51 per cent to N71.0 billion from N47.0 billion in FYE 2015, boosting investors and shareholders confidence in the brand and its management team.

Wale Tinubu, Group Chief Executive, Oando Plc said: “2016 saw the country plunge into a recession, the first in over 2 decades, besieged with liquidity constraints, devaluation of the naira and a slump in oil earnings due to low oil prices intensified by the insurgency in the Niger Delta.
We were proactive in the timely execution of our restructuring program of Growth in our upstream division; Deleverage, through divestments resulting in a net debt reduction of $125 billion; and Profitability by focusing on dollar denominated earnings.

The company saidIn the first quarter of 2016 it successfully restructured its existing obligations through a N108 billion Medium Term facility with a syndicate of 9 leading local banks.
It also completed the full divestment of its Upstream Services business (Oando Energy Services) and the recapitalization of its downstream business to Helios Investment Partners, a premier Africa-focused private investment firm and the Vitol Group, the world’s largest independent trader of energy commodities to the tune of $210 million.
According to the company, the recapitalization of its downstream operations represents the largest inflow of foreign capital in a single transaction in the oil and gas sector in 2016. This strategic initiative is positioned to revolutionize Nigeria’s downstream sector and create one of Africa’s largest downstream operations. In furtherance of Deleverage, through divestments resulting in a net debt reduction of $125 billion; and Profitability by focusing on dollar denominated earnings.
In the first quarter of 2016 the company said it successfully restructured its existing obligations through a N108 billion Medium Term facility with a syndicate of 9 leading local banks.
It also completed the full divestment of its Upstream Services business (Oando Energy Services) and the recapitalization of its downstream business to Helios Investment Partners, a premier Africa-focused private investment firm and the Vitol Group, the world’s largest independent trader of energy commodities to the tune of $210 million.

The recapitalization of Oando’s downstream operations represents the largest inflow of foreign capital in a single transaction in the oil and gas sector in 2016. This strategic initiative is positioned to revolutionize Nigeria’s downstream sector and create one of Africa’s largest downstream operations.

In furtherance of Oando being the partner of choice to foreign investors, the company concluded 2016 with the partial divestment of its midstream business, Oando Gas & Power Limited to Helios Investment Partners, a premier Africa-focused private investment firm for $115.8 million.

However, like many in the industry Oando’s numbers are still indicative of the economic headwinds, operational challenges and continued instability of global oil prices.

An analysis of the full year 2016 results of oil and gas companies operating in Nigeria reveals a steady decline in earnings with ExxonMobil declaring $7.8bn in revenue, compared to $16.2bn in 2015. Royal Dutch Shell recorded its worst annual profit for more than a decade, the company posted fourth-quarter earnings of $1.0 billion, compared to $1.8 billion for the same quarter in 2015.

The company further declared full year 2016 earnings of $3.5 billion compared to $3.8 billion in FYE 2015. Seplat recorded a decline of 55% in revenue of $254 million compared to $570 million in FYE 2015 attributed to force majeure at its Forcados terminal.
Likewise, Oando recorded a 20% decrease in total production to 15.9MMboe (average 43,503 boe/day) in FYE 2016 from 19.9MMboe (average 54,520 boe/day) in the same period of 2015.

The company cited unrest in the Niger Delta for a reduction in their production output specifically sabotage activities at OMLs 60 to 63 and a force majeure on the Qua Iboe terminal resulting in losses estimated at 11,600bbl/d.
“In the, Upstream we witnessed a decline in production but an increase in our 2P Reserves from 445mmboe in 2015 to 469mmboe. We are hopeful that the FGN will establish a long term resolution to the conflict in the Niger Delta which will positively impact the oil and gas industry, consequently ramping up our daily production. In the Midstream we concluded the partial divestment of Oando Gas and Power (OGP) to Helios Investment Partners to further expand our gas footprint, whilst in the Downstream our trading business continued to make in-roads in crude lifting” Tinubu said.

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