JOHANNESBURG - JSE-listed Nigerian oil company Oando plc saw its profits after tax declining by 16percent in the six months to end June, hit by a once-off 14 billion naira charge (R548.10million), but the 15percent increase in crude oil production made up for this decline. As a result, the group's profit after tax declined to 7.2bn naira during the period, down from last year’s 8.5bn naira.
However, chief executive Wale Tinubu said the half year 2019 was a positive period for the group as it achieved strong top and bottom line earnings despite its overall performance being tempered by a one-off 14bn naira charge.
“Our crude oil and natural gas production grew by 15percent and 8percent, respectively, compared to the similar period last year while we also achieved a significant reduction in our reserve based lending facility to approximately $0.4m (R5.7m) from $450m, a 99percent reduction,” Tinubu said.
The group increased its production by 8percent to 40873 barrels of oil equivalent per day (boe/day) compared to 37814boe/day while natural gas production increased by 8percent to 128533 thousand cubic feet per day (mcf/day), up from 118866mcf/day compared to last year.
Its turnover was up by 6percent to 315.4bn naira, up from 297.3bn naira compared to last year, and the group also managed to slash its total borrowing by 5percent to 200.7bn naira, down from last year’s amount of 210.9bn naira. However, the group said since financial year 2014, it had reduced its debt by 58percent from 473.3bn naira, while its upstream borrowings have reduced by 72percent from $801.6m in 2014.
Oando incurred capital expenditure of $62.3m during the period, up from $24.7m compared to last year.
The group is listed on both the Nigerian Stock Exchange and the JSE.
Looking ahead, Tinubu said oil prices had averaged $65 a barrel for most of 2019 and they will continue employing price protection strategy by hedging its production.
“Our focus will be on achieving further growth and profitability by delivering on our production growth initiatives through strategic alliances and partnerships. We also concluded the divestment of our residual interest in Axxela for $41.5m, in line with our strategy of divesting from non-strategic assets and remain on track to deliver on all our initiatives for the year,” Tinubu said.
Oanda’s share price has been under pressure due to a controversial spat with Nigeria’s Securities and Exchange Commission (SEC), which in 2017 ordered a probe into the firm aimed at corporate governance and financial mismanagement.
Oando recently secured a court injunction restraining SEC from executing sanctions against the company including a fine of 89675000 naira.
The court also restrained the commission from enforcing its decision to appoint an interim management team for Oando.