Oando records N8.5 billion profit in first half of 2018

Nigerian oil company, Oando. [Photo credit: Guardian Newspaper]
Nigerian oil company, Oando. [Photo credit: Guardian Newspaper]

Oando continues to defy skeptics as the company recorded N8.5 billion profit-after-tax (PAT) in its half-year ended June 30, 2018 (H1 2018) results. The impressive result comes in the wake of increase in the price of oil and gas commodities.

With each announcement the company has made this year, we are reminded that Oando is an embodiment of perseverance and hardwork. Following the fall in oil prices, Oando like other companies took a significant hit in its revenues and ultimately reported losses.

However, the company has since actively worked toward reversing its fortunes and reminding its shareholders that an investment in the company will indeed pay off. With its H1 2018 results the company has posted its 7th quarter consecutive profit.

An analysis of Oando’s financials shows that the company’s turnover grew by 11% to N297.3billion from N267 billion (H1 2017); gross profit increased by 53% to N51 billion compared to N33.4 billion (H1 2017); and profit-after-tax increased by 86% to N8.5 billion compared to N4.6 billion (H1 2017). In its upstream business, Oando recorded a net profit of N27.1 billion ($75.2 million) compared with N16.3 billion ($53.2 million) in the comparative period of H1 2017.

The increase in net income between the quarters was primarily due to higher revenues as a result of a general increase in the price of oil and gas commodities. Oando picked up on the industry recovery witnessed in 2017. Brent prices averaged $69.87 per barrel, resulting in a 38% increase in realized crude selling price compared to the same period in 2017. Oando’s performance was further buoyed by sale price increases of 19% for NGL and 13% for natural gas deliveries.

Commenting on the results Wale Tinubu, Group Chief Executive, Oando PLC said: “I am pleased to report that Oando PLC has made significant progress in 2018, evidenced by our substantial free cash flow generation and profitability. Oil prices have rallied over the last year, a direct consequence of increasing demand and reduced supply. Higher oil prices, and the resolution of Joint Venture funding challenges with the Nigerian National Petroleum Corporation has driven increased investment in the upstream sector. This stable operating environment, coupled with our fiscal prudence, has reinforced our solid financial footing as we continue to build on the momentum garnered in 2017.”

The company’s performance in the first half of 2018 is a continuation of the strong financial performance delivered last year and in the first quarter of 2018. Oando continues to increase its market share in the downstream sector through its trading business, Oando Trading (OTD). OTD recorded average trading volumes of 8.1 million bbl in the six months ended June 30, 2018 with a total of 6.6m barrels of crude oil and 195,497 MT of petroleum products traded in the first half of the year.

Speaking on Oando’s H1 2018 financials, Alhaji Kabiru Tambari, Oando shareholder with the Sokoto Zone Shareholders Association said:“This results reaffirms my commitment for the management of Oando. Seven profits in a row is no small feat. Not all companies who have gone through what this company has gone through in the last year would be able to come out this strong. I commend the management team and I hope they continue the good work.”

This year alone the Nigerian Stock Exchange (NSE) added Oando to the most influential stocks group. The NSE picked Oando alongside Beta Glass Company as two of the 30 most capitalized stocks. With the Government’s announcement of outstanding subsidy payments due to various companies including Oando, the Company’s share price increased by 9.8%.

Despite being in the middle of an indirect shareholder dispute which has led to a yet to be concluded SEC forensic audit, a review of other activities pertaining to Oando in the first half of 2018 , it is evident that the company is committed to creating value for its shareholders.

Mrs. Oludewa Thorpe an Oando shareholder from the National Coordinating Committee of Shareholders Association spoke on the forensic audit, she explained that she is happy that Oando allowed the SEC to do a forensic audit and is hopeful that the outcome of the audit will be further evidence that the company is being managed well, in the interests of shareholders and is here for the long haul.

Barely a month ago, Oando, Nigeria Agip Oil Company (NAOC), Shell Petroleum Development Company (SPDC) and other indigenous and international oil companies in partnership with the Nigerian National Petroleum Corporation (NNPC) achieved a commendable feat with the signing of an agreement to implement Gas Projects worth $3.7 billion. The gas projects tagged ‘Seven Critical Gas Development Projects (7CGDP)’ is set to bridge the gas supply shortfall in the country.

In April, the Nigerian National Petroleum Corporation (NNPC) announced that a consortium consisting of Oando PLC, through its Midstream affiliate Axxela, and OilServe Limited were awarded the Engineering, Procurement, Construction (EPC) mandate for the construction of gas pipelines stretching from Ajaokuta to Abuja as part of the Ajaokuta-Kaduna-Kano Pipeline.

The pipeline is a section of the Trans-Nigerian Gas Pipeline under the gas infrastructure blueprint designed to enable the industrialisation of the Eastern and Northern parts of Nigeria and will also enable connectivity between the East, West and North, which is currently non-existent. Axxela continues to grow its customer base and is now delivering natural gas to over 175 industrial and commercial customers via its gas network infrastructure.

To improve the local economy and promote self-sustenance in its host communities, Oando and its Joint Venture (JV) partners commissioned an agro-storage facility in the fishery community of Twon Brass, Bayelsa state at the start of the year.

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Since then, they have commissioned other notable projects including, NYSC Corpers Lodge in the Tuoma community in Burutu, Delta state, a water scheme in Agbere Community, Bayelsa, which will save over 5,000 lives; and several road projects in Imo Rivers and Bayelsa state.

The hope is that all indices will continue to remain strong and positive for Oando and that this proudly Nigerian brand will end 2018 winning.


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