Shareholders voted unanimously in favour of all resolutions passed including a vote of confidence in the management of the company. The vote of confidence was evidently borne from the companyâ€™s ability to manoeuvre the cyclical nature of the sector by adapting quickly to continued low oil pricesfollowing its record loss in 2014. Oando initiated a five-pronged restructuring program in 2016 of Growth in its upstream division; Deleverage, through divestments resulting in a net debt reduction to N218 billion as at half-year 2017; and Profitability by focusing on its dollar denominated earnings. This plan has enabled the Group reduce its debt profile by over 40% as noted by the Wale Tinubu, GCE, Oando PLC, at the AGM.
â€œAs your management team we assure you that our main focus will continue to be geared towards sustaining your companyâ€™s profitability and ensuring adequate return for you our esteemed shareholders. Our story has always been one of resilience, innovation and growth, and I assure you that we are fully committed to positioning your Company towards sustained growth.â€ Tinubu said.
In 2016, Oando partnered with a consortium of Helios and Vitol Investment for cash proceeds of $210 million in its downstream business. This cash injection into the business / economy was made possible at a time when everyone thought it impossible to bring foreign investment to the country. Commenting on the transaction, Oando PLCâ€™s Group Chief Executive, Wale Tinubu, said: â€œDespite global economic headwinds, we have taken the proactive approach to establish a strategic partnership which will leverage Oandoâ€™s sector dominance, considerable local knowledge and expertise; together with HVIâ€™s international, and technical capabilities. This partnership will reinvigorate Nigeriaâ€™s downstream sector and create one of Africaâ€™s largest downstream operations. We are extremely confident in the success and potential returns this alliance will deliver.â€
Oando also entered into a 94.6 billion naira Medium Term Loan agreement with a syndicate of Nigerian banks. Commenting on the transaction, Mr. Wale Tinubu, Group Chief Executive, Oando PLC, said â€œIn a bid to return to profitability in 2016, I am happy to announce the successful completion of restructuring our overall debt profile into a N94.6 Billion Medium Term, 5 year consolidated facility, with a 3 year moratorium on principal. The company now stands diversified with higher weighted dollar denominated earnings, an optimised and restructured balance sheet with lower cost of capital and longer tenors. With the upturn in the global oil prices to levels above $50 per barrel, we now look forward to the successes of 2016, having ridden out the stormâ€.
According to him, Oando scored significant operational highlights in the first half of 2017. The company through its upstream business, Oando Energy Resources, successfully realisedÂ N3.2Â billion in net cash from the crystallisation of the corporate facility hedges (1,590 bbls/day) while in the second quarter of 2017, it successfully completed the sale of its interest in OMLs 125 and 134 to Nigerian Agip Exploration LimitedÂ for a profit ofÂ N4.6Â billion.In June 2017, the company successfully realizedÂ N3.2Â billion in net cash from the crystallization of the Corporate Facility hedges.
In the downstream, Oando Trading (OTD), a key participant in international oil markets with a significant presence in the West African region, witnessed a 40% growth in traded volumes and a commendable 147% increase in turnover to N217.5 billion compared to N88.1billion half-year2016. The trading business lifted volumes exceeding 7.5mmbbls of crude and imported 610,000MT of refined petroleum products.
The GCE thanked the shareholders for their continued support of the Company in the challenging times. He said moving forward, the companyâ€™s focus is geared towards sustaining growth via its dollar earning upstream and downstream trading businesses, while continuing to provide the necessary support to its new partners in the midstream and downstream businesses.â€œIn addition to our growth focus, profitability will be driven by focused cost and liquidity management, with significant selective oil and gas production initiatives planned for 2017,â€ he said.
Tinubu also mentioned that â€œWith security concerns in the Niger Delta receding, Nigeriaâ€™s economic recovery has been buoyed by a boost in oil output, while the legislative approval of certain segments of the Petroleum Industry Bill (PIB) provides greater long-term policy certainty for the sector. Our returns underline our continued successful foray into the Upstream.â€