The storm appears over for one of Nigeriaâ€™s oil giants, Oando Plc, as it posted N1.7 billion profit after tax (PAT) in the first quarter of the year.
A statement by the companyâ€™s Chief Strategy and Corporate Services Officer, Mr. Ainojie Irune, on Monday said the profit came on the heels of its turnover growth by 116% to N138.4 billion and gross profit by 53% to N13.4 billion compared to the first quarter of 2016.
It attributed the good performance to proactive measures taken by management to enable the company cushion the effect of the economic headwinds in the country.
â€œWe are pleased with our Q1 2017 results, which reflect a return to normalcy and growth in spite of continued security challenges, economic headwinds and a fluctuation in crude prices,â€ Mr. Wale Tinubu, Group Chief Executive of the company, said in the statement, explaining that this was made possible by the successful restructuring of the company in 2016.
The result showed that the company had continued to reduce its net debt, quelling any concerns of critics. As at March 2017 it stood at N225.9 billion a 29% reduction from N316.6 billion in March 2016.
According to Tinubu, â€œIn the upstream, production in the first quarter of 2017 decreased to 38,125 bpd compared to 49,365 bpd in Q1 2016. However, due to decreased production expenses, Oando Energy Resources (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.
â€œIn 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.
â€œIn the downstream, our trading business through Direct Sale & Direct Purchase (DSDP) and Offshore Processing Agreement (OPA) yielded N115.6 billion compared to N4.4 billion in 2016.â€
The Nigerian oil and gas industry and the economy had been plagued by low oil prices, production disruptions, reduced oil exports and the attendant economic recession, forcing most oil and gas companies, particularly upstream players to struggle to navigate the difficult terrain that translated to lower revenues and operating cash flows.
But the company said its strategy of growth across its business operations; deleveraged through the divestment of non-performing assets; and profitability, by focusing on dollar denominated export earnings paid off as it recorded the Q1 N1.7billion profit.
It said through its upstream subsidiary, Oando Energy Resources (OER), the company adopted a hedge mechanism that ensured the business was protected from fluctuating oil prices, saying the subsidiary, however, 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.
It regretted that the Trans Forcados pipeline continued to suffer downtime, resulting in reduced production from its Ebendo field.
Oando said despite these operational challenges, OER recorded a 608% increase in profits; N4.96 billion in the first quarter of 2017 against a profit of N815.5 million for same period in 2016.
It explained that its Downstream Oando Trading (OTD) witnessed a 150% growth in traded volumes and a significant increase of 1718% in turnover to N115.6 billion compared to N4.4 billion the comparative year, adding that it also increased its secured credit lines by N76.6 billion to a total of N214.4 billion, giving it added leverage to further grow the business.
â€œThe first quarter earnings from OER and OTD underscore our proactive decision to focus on our dollar denominated export businesses,â€ Tinubu said, adding: â€œOur resilience is evident in our capacity to grow via a diversified model, and as we continue to chart our deliberate path in this challenging business environment, we look forward to better performance in the quarters to come.â€