As the effect of global economic challenges in the oil & gas sector persist, Oando Plc has announced a loss of N26.99 billion in half year ended June 30, 2016.
The Nigeria’s leading indigenous energy group listed on both the Nigerian and Johannesburg Stock Exchanges, profit dropped by 23 per cent from N35 in prior half year unaudited accounts.
Gross profit also decreased by 49 per cent to N19 billion from N37.1 billion in H1 2015 while turnover increased by 18 per cent to N212.0 billion compared to N180.0billion recorded in H1 2015.
The company explained that its half year accounts has been duly affected as a result of the new reality in international commodity prices of $50/barrel and the operating challenges in the Niger Delta that have occasioned a 25per cent reduction in daily production volumes from 56kboepd H1, 2015 to 45kboepd in H1 2016.
Oando in a statement further explained that the devaluation of the Naira by the Central Bank of Nigeria (CBN) in second quarter (Q2, 2016) from an average exchange rate of N199.00:$1.00 to above N280.00:$1.00, resulted in unrealized foreign exchange losses due to our dollar denominated liabilities.
The company noted that it has taken action by converting $133 million liabilities on its accounts to N38.6 billion which is currently being serviced by naira, hence leaving only dollar denominated liabilities to be serviced by our dollar earnings.
“In the period under review we have executed 70 per cent of our asset disposal target and 100per cent of our refinancing target and are poised to return the business to profitability by year end 2016,” the company stressed.
Commenting, Group Chief Executive, Oando Plc, Mr. Wale Tinubu said: “The first half of the year has attested to the deplorable state of security in the oil & gas environment in Nigeria, having experienced a 25 decline in production volumes arising from the increased disruptions from militant activities.
“On a positive note, the company has benefitted from the implementation of the oil price hedge, which has helped to calm the effects of the disruption of production activities and aided in the rapid pay down of the $900 million of upstream related liabilities at the time of the Conoco Philips Acquisition, to $440 million today.
“We are pleased to have received $210 million into our downstream group representing 70per cent of our asset disposal plans and also concluded the restructuring of our debt through the N108 billion medium term note.
“Now that the dollar liquidity position in the country has improved, we have limited the risk of exchange rate volatility by converting a substantial portion of our dollar denominated obligations to naira, thereby matching our dollar liabilities to our dollar generating businesses.
“We reiterate our forward looking business model of a focused upstream and export trading businesses, which will drive profitability through consistent dollar earnings,” he stated.
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