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Oando Posts N1.7bn PAT, Raises Revenue By 116%

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  • Oando Posts N1.7bn PAT, Raises Revenue By 116%

The storm appears over for one of Nigeria’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 company’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.

“We 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,” 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, “In 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.

“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 & Direct Purchase (DSDP) and Offshore Processing Agreement (OPA) yielded N115.6 billion compared to N4.4 billion in 2016.”

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.

“The first quarter earnings from OER and OTD underscore our proactive decision to focus on our dollar denominated export businesses,” Tinubu said, adding: “Our 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.”

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Communities in Delta State Shut OML30 Operates by Heritage Energy Operational Services Ltd

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The OML30 operated by Heritage Energy Operational Services Limited in Delta State has been shut down by the host communities for failing to meet its obligations to the 112 host communities.

The host communities, led by its Management Committee/President Generals, had accused the company of gross indifference and failure in its obligations to the host communities despite several meetings and calls to ensure a peaceful resolution.

The station with a production capacity of 80,000 barrels per day and eight flow stations operates within the Ughelli area of Delta State.

The host communities specifically accused HEOSL of failure to pay the GMOU fund for the last two years despite mediation by the Delta State Government on May 18, 2020.

Also, the host communities accused HEOSL of ‘total stoppage of scholarship award and payment to host communities since 2016’.

The Chairman, Dr Harrison Oboghor and Secretary, Mr Ibuje Joseph that led the OML30 host communities explained to journalists on Monday that the host communities had resolved not to backpedal until all their demands were met.

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Crude Oil Recovers from 4 Percent Decline as Joe Biden Wins

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Oil Prices Recover from 4 Percent Decline as Joe Biden Wins

Crude oil prices rose with other financial markets on Monday following a 4 percent decline on Friday.

This was after Joe Biden, the former Vice-President and now the President-elect won the race to the White House.

Global benchmark oil, Brent crude oil, gained $1.06 or 2.7 percent to $40.51 per barrel on Monday while the U.S West Texas Intermediate crude oil gained $1.07 or 2.9 percent to $38.21 per barrel.

On Friday, Brent crude oil declined by 4 percent as global uncertainty surged amid unclear US election and a series of negative comments from President Trump. However, on Saturday when it became clear that Joe Biden has won, global financial markets rebounded in anticipation of additional stimulus given Biden’s position on economic growth and recovery.

Trading this morning has a risk-on flavor, reflecting increasing confidence that Joe Biden will occupy the White House, but the Republican Party will retain control of the Senate,” Michael McCarthy, chief market strategist at CMC Markets in Sydney.

“The outcome is ideal from a market point of view. Neither party controls the Congress, so both trade wars and higher taxes are largely off the agenda.”

The president-elect and his team are now working on mitigating the risk of COVID-19, grow the world’s largest economy by protecting small businesses and the middle class that is the backbone of the American economy.

There will be some repercussions further down the road,” said OCBC’s economist Howie Lee, raising the possibility of lockdowns in the United States under Biden.

“Either you’re crimping energy demand or consumption behavior.”

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Nigeria, Other OPEC Members Oil Revenue to Hit 18 Year Low in 2020

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Revenue of OPEC Members to Drop to 18 Year Low in 2020

The United States Energy Information Administration (EIA) has predicted that the oil revenue of members of the Organisation of the Petroleum Exporting Countries (OPEC) will decline to 18-year low in 2020.

EIA said their combined oil export revenue will plunge to its lowest level since 2002. It proceeded to put a value to the projection by saying members of the oil cartel would earn around $323 billion in net oil export in 2020.

If realised, this forecast revenue would be the lowest in 18 years. Lower crude oil prices and lower export volumes drive this expected decrease in export revenues,” it said.

The oil expert based its projection on weak global oil demand and low oil prices because of COVID-19.

It said this coupled with production cuts by OPEC members in recent months will impact net revenue of the cartel in 2020.

It said, “OPEC earned an estimated $595bn in net oil export revenues in 2019, less than half of the estimated record high of $1.2tn, which was earned in 2012.

“Continued declines in revenue in 2020 could be detrimental to member countries’ fiscal budgets, which rely heavily on revenues from oil sales to import goods, fund social programmes, and support public services.”

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