Oando Plc’s strategy of growth across its business operations has steadily paid off as it records N1.7 billion profit in Q1 2017.
The company’s turnover grew by 116 per cent to N138.4 billion and gross profit by 53 per cent to N13.4 billion compared to the first quarter of 2016. Oando’s N1.7 billion profit can be attributed to proactive measures put in place to enable the business cushion the effect of continued economic headwinds.
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 despite continued security challenges, economic headwinds and a fluctuation in crude prices.”
The company has continued to reduce its net debt; as at March 2017, it stands at N225.9 billion, a 29 per cent reduction from N316.6 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, 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 and Direct Purchase (DSDP) and Offshore Processing Agreement (OPA) yielded N115.6 billion compared to N4.4 billion in 2016,” Tinubu said.
In the Upstream, 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.