An eleven percent increase in production in the first quarter of 2019 significantly improved the bottom line of Nigeria’s leading indigenous oil and gas firm, Oando Plc. Unaudited results announced last week for the first quarter ended March 31, 2019 showed that gross revenue for the period rose by12 percent to N168 billion from N150.6 billion a year ago.
Production increased to 43, 745 barrels of oil equivalent per day in the first quarter of 2019 up from 39,556 boe/day same period in 2018. When decomposed, crude oil production was 16,815 bbls/day in the first quarter of 2019 compared with 14,823bbls/day in similar period in 2018, representing an increase of 13 percent, quarter on quarter. Natural gas liquids were down by 39 percent to 2,403 boe/day during the first three months of 2019 as against 3,915 boe/day in Q1 2018. Production natural gas liquids rose by 18 percent from 124,910 million cubic feet/day to 147,163 mcf/day in 2019.
Wale Tinubu, group chief executive office attributed this improvement to reduction in debt overhang and stability in crude oil prices at the international market.
“Our results reflect the progress made over the last few quarters and provides an indication of our expectation for the year. Now that our debt profile is down by 78% from $2.5billion as of December 2014 to $558million currently, and our de-leverage program is 90% complete with most of our non-core operations divested for good value, we can now focus on steady growth in our upstream entity.
“With ICE Brent Crude Oil price currently at a decent level of $74.48 per barrel, our efforts will be geared towards increasing our production to sustain profitability and position us on the path to resumption of dividend payment to our shareholders”, Wale Tinubu said.
Operating profit rose by 15 percent from N14.9 billion to N17.1 billion during the period. Profit after tax leapt by 11 percent to N1.63 billion from N4.19 billion during the reference period. The company expect better results in the remaining quarters of the year.
“Oil prices have recovered to over $74 per barrel as at the end of April 2019 after reaching a low of just over $50 per barrel at the end of 2018. We expect prices to remain at their current levels in the near term. As a business, our focus will be largely on driving profitability via growth in our upstream business and achieving further reduction of borrowings.
“In the upstream, we will pursue production growth initiatives through strategic alliances, whilst ensuring operational efficiency and fiscal prudence. We will also continue to work with our partners to achieve cost optimization on our Joint Venture operations, ensuring the gains from higher revenues are not lost to increasing operating costs. Our trading business’s primary focus will be geared towards growing our existing market share in Nigeria while leveraging on our relationships with international financiers”, Ayotola Jagun, company’s secretary said in a note to the Nigerian Stock Exchange.
Oando Plc’s share price closed last week at N5.30 per share as investors traded 4.5 million shares last Friday. Year to date, the stock has appreciated by 6 percent.
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