28/06/2017 Nigeria Stock Exchange (NSE:OANDO) =7.18 (0.06) Johannesburg Stock Exchange (JSE:OAO) = 20.00 (0.00)

Oando PLC Announces FYE 2016 Results, Posts N3.5 Billion Profit After Tax

Lagos, Nigeria – Oando PLC (referred to as “Oando” or the “Group”), Nigeria’s leading indigenous energy group listed on both the Nigerian and Johannesburg Stock Exchange, today announced audited results for the year ended 31 December, 2016, with the following highlights:

Financial Highlights:

  • Turnover increased by 49%, N569.0 billion compared to N382.0 billion (FYE 2015)
  • EBITDA increased by 51%, N71.0 billion compared to N47.0 billion (FYE 2015)
  • Profit-After-Tax increased by 107% N3.5 billion compared to a loss (N47.6 billion) (FYE 2015)
  • Net debt reduced by 35% N230.6 billion compared to N355.4 billion (FYE 2015)

Operational Highlights 

Upstream:

  • Oando Energy Resources (OER) during the year ended December 31, 2016 recorded a 20% decrease in total production to 15.9MMboe (average 43,503 boe/day) from 19.9MMboe (average 54,520 boe/day) in comparative period of 2015.
  • Approximately 46% of crude production – as at December 31, 2016, 9,590 bbls/day was hedged at $65/bbl (average) with expiry dates ranging from July 2017 to January 2019, and further upside on the condition of certain price targets being met.
  • 2P Reserves increased by 5% from 445mmboe in 2015 to 469.3mmboe due to reservoir performance
  • Oando concluded the sale of its interests in OMLs 125 and 134 to the Operators for cash proceeds of $5.5m and assumption of $88.5m in cash call liabilities due to the joint ventures.

Midstream:

  • Oando completed the partial divestment of 49% of the voting rights in the company’s midstream business subsidiary, Oando Gas and Power Limited (“OGP”), to Glover Gas & Power B.V., a special purpose vehicle owned by Helios Investment Partners LLP (“Helios”), a premier Africa-focused private investment firm for $115.8 million.
  • Oand Gas and Power (OGP) concluded the sale of Akute Independent Power Plant for a transactional value of N4.6bn.

Downstream:

  • Oando successfully concluded the recapitalization of its downstream business for $210 million by HV Investments II B.V., (“HVI”), a joint venture owned by Helios Investment Partners (“Helios”), a premier Africa-focused private investment firm and the Vitol Group (“Vitol”), the world’s largest independent trader of energy commodities.
  • Oando Trading witnessed continued growth resulting in a 106% increase in traded volumes of Crude Oil and Refined Petroleum Products, accomplished through a number of structured and well executed initiatives.
  • Physical volumes of 13 million barrels of crude oil and 3 million MT of refined petroleum products were transacted.
  • Trading revenues hit a four-year high at $1.4 billion.

The volatility in oil prices continues to impact the balance sheet of oil companies globally. This is evident in a decline in Oando’s crude oil and natural gas sales in the year ended 31 December, 2016. Unrest in the Niger Delta forced a reduction in Oando’s production, 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.  Despite these challenges the company achieved successes in the year as witnessed by an improvement in top line revenue, deleverage of the company’s balance sheet and growth in its business model of higher weighted dollar earnings in both the Upstream and Downstream operations.

Commenting, Mr. 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 N125bn; and Profitability by focusing on dollar denominated earnings.  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.  As we enter a new phase in our business evolution we are optimistic about 2017 and look forward to even more successes having braved the challenges of 2016.”

Operational Update

In the Upstream Oando Energy Resources (OER) had an average production of 43,503 boe/day compared to 54,520 boe/day in the year ended 31 December, 2015. This reduction was mainly due to increased disruptions in the Niger Delta and led to the company incurring repairs and a restoration cost estimated at $17 million.

Although the Midstream was also impacted by the unrest in the Niger Delta leading to a drop in gas volumes from 62mmscf per day in 2015 to ~40mmscf per day in 2016, the company recorded the successful conclusion of its partial divestment to Helios Investment Partners. This partnership will firmly leverage OGP’s local knowledge and expertise, alongside Helios’s global network and financial capabilities to optimise the company’s existing operations and expand its footprint. Also nearing completion was the 8.3km Greater Lagos 4 pipeline project culminating 3 river crossings and the deployment of advanced technology extending OGP’s gas footprint from the Ijora area of Lagos State through to Marina Business District; enabling improved utilisation of the company’s 100mmscf per day gas distribution capacity.

In the Downstream, Oando Trading executed significant joint venture trading opportunities with ENI and Cepsa, positively impacting revenues of $1.4 billion, a 4 year high for the business.

Ends.

For further information, please contact:

Ainojie ‘Alex’ Irune

Chief Strategy & Corporate Services Officer

2, Ajose Adeogun Street,

Victoria Island,

Lagos, Nigeria.

Tel: +234 (1) 270400, Ext: 6270

airune@oandoplc.com