OANDO PLC - Oando PLC Announces Audited FYE 2020 Results, Posts N141 Billion Loss-After-Tax

Oando PLC Announces Audited FYE 2020 Results, Posts N141 Billion Loss-After-Tax

Oando PLC
(Incorporated in Nigeria and registered
as an external company in South Africa)
Registration number: RC 6474
(External company registration number 2005/038824/10)
Share Code on the JSE Limited: OAO
Share Code on the Nigerian Stock Exchange: UNTP
ISIN: NGOANDO00002
(“Oando” or the “Company”)



                                      PRESS STATEMENT

  Oando PLC Announces Audited FYE 2020 Results, Posts N141 Billion Loss-After-Tax

Lagos, Nigeria – Oando PLC (referred to as “Oando” or the “Group”), Nigeria’s leading indigenous
energy group listed on both the Nigerian and Johannesburg Stock Exchange, today announced
audited results for the twelve months period ended December 31, 2020.

HIGHLIGHTS

Operational

   •   Upstream: 5% production increase, 44,550boe/day compared to 42,492boe/day (FYE
       2019)
          o Oil production of 15,912bbls/day (vs 17,969bbls/day in FYE 2019)
          o Natural Gas production of 26,881boe/day (vs 22,047boe/day in FYE 2019)
          o NGL production of 1,757bbls/day (vs 2,476bbls/day in FYE 2019)

   •   Trading:
          o 13% increase in traded crude oil volumes of 16 million (vs 14 million in FYE 2019)
          o 53% increase in traded refined petroleum products (694,653 MT compared to
             452,919 MT in FYE 2019)

Financial

   •   17% Turnover decrease, N477 billion compared to N577 billion (FYE 2019)
   •   Loss-After-Tax of N141 billion compared to Loss-After-Tax of N207 billion (FYE 2019)
   •   16% Total Group Borrowings increase, N420 billion compared to N362 billion (FYE 2019)

Commenting on the results Wale Tinubu, Group Chief Executive, Oando PLC said:

“The conclusion of our Full Year 2020 audit confirms our earlier published 2020 unaudited
financial statements in which we announced negative earnings driven by asset impairments
resulting from a combination of the impact of COVID-19 pandemic, and the regrettable, unfair,
and coerced settlement of a long-standing shareholder issue.
The global pandemic had a profound impact on the entire oil and gas industry, leading to a sharp
decline in energy demand and consequently, lower oil prices. As a result, we had to reassess the
carrying value of our assets and investments, resulting in non-financial impairments. Furthermore,
the second tranche funding of the settlement of a protracted and disruptive shareholder issue
resulted in us taking a further impairment on a category of our financial assets.
Despite these challenges, we are optimistic about the future as our upstream production
optimization initiatives are focused on securing our current production, increasing production
efficiency, and reducing costs, while we strive for expansion by actively seeking out inorganic
growth opportunities. Furthermore, our foray into clean energy will provide a hedge against the
volatility of the oil and gas market, and position us for the energy transition, as well as long-term
growth. We are excited about the opportunities and potential for growth that these initiatives will
bring and look forward to updating our shareholders on our progress."
OPERATIONS REVIEW

Upstream:

Production for the twelve months ended 31 December 2020:

                                            FYE 2020             FYE 2019               % Change
 Crude Oil (bbls/day)                         15,912               17,969                   -11%
 NGLs (bbls/day                                1,757                2,476                   -29%
 Natural Gas (boe/day)                        26,881               22,047                    22%
 Total (boe/day)                              44,550               42,492                     5%

During the twelve months ended December 31, 2020, production was 44,550 boe/day, compared
to 42,492 boe/day in 2019. In 2020, production consisted of 15,912 bbls/day of crude oil, 1,757
boe/day of NGLs and 161,288 mcf/day (26,881 boe/day) of natural gas. The increase in
production was a result of increased natural gas production at OML 60-63 (22%) offset by 29%
decrease in NGL production and 5% and 16% crude production decreases at OML 56 and OML
13 respectively. Production decreases were a result of shut-ins for repairs, maintenance and
sabotage incidences at the facilities.

During the twelve months to December 31, 2020, Oando spent $83 million on capital expenditures
related to the development of oil and gas assets and exploration and evaluation activities,
compared to $79 million in the twelve months to December 31, 2019.

Capital Expenditures in 2020 consisted of $80 million at OMLs 60 to 63 incurred on oil and gas
properties, $2 million at OML 56 and $1 million capital expenditure recorded on other assets.

Downstream:

Traded volumes for the twelve months ended 31 December 2020:

  Traded Volumes                                FYE 2020            FYE 2019            % Change

  Crude Oil (bbls)                             16,081,633          14,173,691                  13%
  Refined Products (MT)                           694,653             452,919                  53%

In FYE 2020, Oando Trading traded approximately 16 million barrels of crude oil under various
contracts with the Nigerian National Petroleum Corporation (NNPC) and delivered 694,653 MT of
refined products.
FINANCE REVIEW

 N Million (unless otherwise stated)                  FYE 2020           FYE 2019     % Change
 Revenue                                                477,070            576,572         -17%
 Operating Loss                                        (74,339)          (334,881)         -78%
 Loss-After-Tax                                       (140,674)          (207,078)         -32%
 Total Borrowings                                       419,630            362,166          16%
 Average Realized Oil Price (US$/bbl)                     34.21              62.59         -45%
 Average Realized Gas Price (US$/mcf)                       1.19               1.54        -23%
 Average Realized NGL Price (US$/boe)                       5.48               6.84        -20%


Revenue

Revenue for the period was directly impacted by volatile product prices due to the global economic
impact of the pandemic, with realized average crude oil price declining by 45% ($34.21 per barrel
compared to $62.59 per barrel in 2019), natural gas by 23% ($1.19/mcf compared to $1.54/mcf
in 2019), and NGL by 20% ($5.48/boe compared to $6.84/boe in 2019). These contributed to an
overall decline in revenue of 17% (N477 billion compared to N577 billion in the same period in
2019) despite a 5% increase in production (44,550 boepd compared to 42,492 boepd in 2019), a
13% increase in traded crude oil volumes (16,081,633 bbls compared to 14,173,691 bbls in 2019),
and a 53% increase in traded refined products (694,653 MT compared to 452,919 MT in 2019).

Operating Loss

The Operating Loss of N74 billion in 2020 was driven primarily by asset impairments totalling N66
billion as detailed below:

   I.   Impairment of Non-Financial Assets: The futures market forward curve for brent
        carried lower forecasted prices due to the impact of the COVID-19 pandemic on global
        oil demand and subsequently crude prices. As such, OER’s Exploration & Evaluation
        (“E&E”) assets had to be impaired as their fair value less costs of disposal and the
        discounted estimated cash flows for producing assets became lower than their carrying
        value. This assessment of E&E impairment losses resulted in a total impairment of N3
        billion.

  II.   Impairment of Financial Assets: This largely relates to an impairment of receivables
        utilized towards financing of the settlement of a disruptive and value destructive long-
        standing shareholder dispute which culminated in the forced settlement of the indirect
        shareholder. In accordance with IFRS guidelines, an impairment test was carried out on
        the financing of the agreed settlement, resulting in an impairment on financial assets of
        N63 billion.

Loss-After-Tax
The Loss-After-Tax for FYE 2020 of N141 billion was driven primarily by a 17% decline in revenue,
the above asset impairments of N66 billion, as well as a 48% increase in Net Finance Costs to
N60 billion (compared to N41 billion in 2019).

Total Borrowings

Total Borrowings increased by 16% to N420 billion (compared to N362 billion in FYE 2019) largely
due to the financing of the settlement of the protracted shareholder dispute as stated above.


LOOK AHEAD

Despite the impact of the global pandemic, we remain excited about prospects of our upstream
oil and gas industry as we continue to pursue organic and inorganic growth opportunities to
increase production in the near term, whilst enhancing security initiatives towards securing our
existing production. We will also continue working with our partners towards implementing
efficient risk management and stringent cost optimization strategies across all our Joint Venture
operations.

Our trading business (OTD) continues to actively focus on strategic partnership and operating
joint venture structures towards increasing its trading volumes, expanding its trade finance lines
and attracting new equity investments.

We have also taken a strategic decision to diversify our operations into the renewable energy
space towards investing in climate friendly and bankable energy solutions across Nigeria, and
meeting the Nation’s extensive energy demands through the exploitation of sustainable energy
solutions. We look forward to keeping our shareholders informed of our progress in the coming
years.

Ends.

For further information, please contact:

Ayotola Jagun
Company Secretary
The Wings Office Complex
17a Ozumba Mbadiwe Avenue
Victoria Island,
Lagos, Nigeria.
Tel: +234 (1) 270400, Ext 6159
ajagun@oandoplc.com

Adeola Ogunsemi
Group Chief Financial Officer
The Wings Office Complex
17a Ozumba Mbadiwe Avenue
Victoria Island,
Lagos, Nigeria.
Tel: +234 (1) 270400, Ext 6506
aogunsemi@oandoplc.com
Ibukun Opeodu
Investor Relations Manager
The Wings Office Complex
17a Ozumba Mbadiwe Avenue
Victoria Island,
Lagos, Nigeria.
Tel: +234 (1) 270400, Ext 6114
iopeodu@oandoplc.com

For Oando PLC

Ayotola Jagun
Chief Compliance Officer & Company Secretary

Lagos
March 28, 2023

Shareholders are advised that the Company’s financial results for the twelve months period ended
31 December 2020 are now available on the JSE Limited website:
https://senspdf.jse.co.za/documents/2023/jse/isse/untp/oando20.pdf

Full Announcement

This short-form announcement is the responsibility of the Directors of the Company and is a summary of
the information in the full announcement.

Any investment decision by investors and/or shareholders should be based on consideration of the full
announcement, copies of which may be requested from the Company Secretary DDawodu@Oandoplc.com
at no charge.


JSE Sponsor to Oando
Questco Corporate Advisory Proprietary Limited


GLOSSARY

“boe/day”                                        barrels of oil equivalent per day
“bbls/day”                                       barrels of oil per day
“mcf/day”                                        thousand cubic feet per day
“bbls”                                           barrels of oil
“boe”                                            barrels of oil equivalent
“US$/bbl”                                        US dollars per barrel of oil
“US$/boe”                                        US dollars per barrel of oil equivalent
“US$/mcf”                                        US dollars per thousand cubic feet
“MT”                                             Metric Tonnes
“OML”                                            Oil Mining Licence

Date: 29-03-2023 08:37:00
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