Wrap Text
Financial results for the year ended 31 December 2019
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 OANDO PLC
Share Code on the Nigerian Stock Exchange: UNTP
ISIN: NGOANDO00002
(“Oando” or the “Company”)
Oando PLC Announces Full Year End 2019 Results
Lagos, Nigeria – Oando PLC (referred to as “Oando” or the “Group”), Nigeria’s leading indigenous energy
group listed on both Nigerian Exchange Limited and Johannesburg Stock Exchange, today announced
audited financial statements for the year ended December 31, 2019.
HIGHLIGHTS
Operational
Upstream: 6% production increase, 42,492boe/day compared to 40,023boe/day (FYE 2018)
• 6% increase in Oil production, 17,969bbls/day (vs 16,967bbls/day in FYE 2018)
• 11% increase in Natural Gas production, 22,047boe/day (vs 19,922 in FYE 2018)
• 21% decrease in NGL production, 2,476bbls/day (vs 3,134bbls/day in FYE 2018)
Downstream:
• Traded crude oil volumes of 14.17 million (vs 14.19 million in FYE 2018)
• 39% decline in traded refined petroleum products (452,919 MT compared to 739,876 MT in FYE
2018)
Financial
• 15% decrease in Turnover, N576.6 billion compared to N679.5 billion (FYE 2018)
• Loss-After-Tax of N207.1 billion compared to Profit-After-Tax of N28.8 billion (FYE 2018)
• 72% Total Group Borrowings increase, N362.2 billion compared to N210.9 billion (FYE 2018)
Commenting on the results, Wale Tinubu, Group Chief Executive, Oando PLC said:
“2019 witnessed the completion of our corporate strategy of divesting from our naira earning businesses to
focus on a dollar-earning portfolio following the sale of our 25% residual stake in Axxela to Helios
Investment Partners. This guarantees that future income is protected from foreign exchange fluctuations
which have hindered us in the past.
We also recorded a 6% and 11% growth in crude oil and natural gas production respectively compared to
the prior year due to an aggressive ramp up in drilling activities across our joint venture operations.
However, the COVID-19 pandemic, despite surfacing at the tail end of 2019, had major repercussions on
financial reporting across the globe with the oil industry recording over $145 billion in write-downs due to
the impact of the pandemic on future cash flows, and consequently,
1
the valuation of oil and gas assets. We were no exception as following a thorough evaluation of our oil and
gas assets, we had to book non-financial impairments of N169 billion during the year in line with IFRS
reporting guidelines. In addition, following the successful resolution of a long-standing, and value
destructive shareholder dispute that had plagued the company since 2017, we had to recognize a significant
impairment of N148 billion on the financial assets arising from the financing and settlement of the resolution.
Subsequently, we quickly put in place mechanisms to safeguard our business by implementing a hedging
program to protect our oil revenue and in April 2020, utilized the proceeds from crystalizing the hedges
towards reducing debt obligations. This ensured that our cashflows were not severely stressed during a
period which witnessed cashflow challenges for many of our peers. Furthermore, we successfully extended
our NAOC-OOL-NPDC JV crude offtake contract, thereby securing long term offtake of our crude lifting
volumes. In conjunction with our partners, we implemented stringent cost management strategies across
all our Joint Venture operations, in addition to reducing operating expenses.
Nevertheless, we remain focused on aggressively increasing our upstream production, growing our trading
volumes, and optimising our balance sheet towards returning the company to profitability within the shortest
possible time”.
OPERATIONS REVIEW
Upstream:
Production for the financial year ended 31 December 2019:
FYE 2019 FYE 2018 % Change
Crude Oil (bbls/day) 17,969 16,967 6%
NGLs (bbls/day 2,476 3,134 -21%
Natural Gas (boe/day) 22,047 19,922 11%
Total (boe/day) 42,492 40,023 6%
During the financial year ended December 31, 2019, production increased by 6% to 42,492boe/day,
compared with 40,023boe/day over the same period of 2018. A breakdown of the 2019 production consisted
of 17,969 bbls/day of crude oil, 2,476 boe/day of NGLs and 132,281 mcf/day (22,047 boe/day) of natural
gas.
Over the course of the year, in conjunction with our JV partners, we aggressively ramped up our drilling
program towards increasing oil revenue and meeting our gas obligations. In July 2019, we successfully
completed a side-track at OML 56, shoring up net production by ~1,500bbls/day, whilst also drilling and
completing five wells across three rig lines at our joint venture operations on OMLs 60-63 during the year.
In September 2019, the NAOC/ OOL/ NPDC JV (of which Oando Energy Resources [OER] holds a 20%
working interest through its subsidiary OOL) announced that it had made a significant gas and condensate
find in the deeper sequences of the Obiafu-Obrikom fields in OML 61, onshore Niger Delta, amounting to
about 1 trillion cubic feet of gas and 60 million barrels of associated condensate. The well has the capacity
to deliver more than 100 million standard cubic feet/day of gas and 3,000 barrels/day of associated
condensates. The discovery is part of a drilling campaign planned by the Joint Venture aimed at exploring
near-field and deep pool opportunities as immediate time to market opportunities. OER is positive that this
discovery will have an impact on its gas reserves.
Capital expenditure of $78.8 million was incurred in the 2019 financial year compared to $104.9 million in
same period in 2018, representing a 25% decrease. Approximately 91% of 2019 Capital expenditure was
allocated to OMLs 60-63 ($71.3 million) towards the development of oil and gas assets, as well as
exploration and evaluation activities. $6.3 million was spent on OML 56 towards development drilling and
2
capital construction. $1.2 million was spent largely on capital construction, as well as to advance exploration
on the other assets.
Downstream:
Traded volumes for the financial year ended 31 December 2019:
Traded Volumes FYE 2019 FYE 2018 % Change
Crude Oil (bbls) 14,173,691 14,187,897 0%
Refined Products (MT) 452,919 739,876 -39%
In FYE 2019, Oando Trading traded approximately 14 million barrels of crude oil under various contracts
with the Nigerian National Petroleum Corporation (NNPC) and delivered 452,919 MT of refined products.
FINANCE REVIEW
N Million (unless otherwise stated) FYE 2019 FYE 2018 % Change
Revenue 576,572 679,465 -15%
Operating Loss (334,881) 44,002 -861%
Loss-After-Tax (207,078) 28,798 -819%
Total Borrowings 362,166 210,901 72%
Average Realized Oil Price (US$/bbl) 62.59 69.44 -10%
Average Realized Gas Price (US$/boe) 9.24 10.56 -13%
Average Realized NGL Price (US$/boe) 6.85 9.15 -25%
Revenue
The 15% decline in turnover was driven by a 10% decline in our average realized oil price in 2019 ($62.59
per barrel compared to $69.44 per barrel in 2018). Other upstream products also recorded declines in
average realized price compared to 2018 (Natural Gas -13%; NGL -25%). In the downstream, we recorded
a 39% decline in traded volumes on refined products.
Operating Loss
The Operating Loss of N334.9 billion in 2019 was driven primarily by asset impairments totalling N316.7
billion as detailed below:
I. Impairment of Non-Financial Assets: An impairment on non-financial assets of N169.1 billion
consists largely of exploration and evaluation (“E&E”) asset impairment losses of N12.6 billion and
goodwill impairment losses of N156.5 billion.
• E&E Asset Impairment Losses (N12.6 billion): This was driven by a re-assessment of
expected cash flows from oil, gas and NGL reserves. As at the time of the assessment, 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. This
assessment led to an impairment loss of N12.6 billion.
3
• Goodwill Impairment Losses (N156.5 billion): OER’s goodwill arising from E&E and
producing assets was also impaired as the fair value less costs of disposal of E&E assets
and the discounted estimated cash flows for producing assets were lower than its carrying
value. As explained above, 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. This assessment of goodwill impairment losses resulted in a
total impairment of N156.5 billion.
II. Impairment of Financial Assets: This relates to an impairment of receivables utilized towards
financing of a long-standing shareholder dispute that had plagued the Company since 2017.
Oando’s intervention in resolving this dispute was crucial as the protracted issue had resulted in
significant destruction of value for the company in general, and minority shareholders in particular.
In accordance with IFRS guidelines, an impairment test was carried out on the receivables utilized
towards the agreed settlement, resulting in an impairment on financial assets of N147.6 billion.
Loss-After-Tax
The Loss-After-Tax for FYE 2019 of N207.1 billion was driven primarily by the above asset impairments of
N316.7 billion, partially offset by an income tax credit of N170.3 billion. In June 2019, OER received a
notification from the Nigerian Investment Promotion Commission (NIPC) for Company Income Tax Relief
for an additional period of 2 years (2017 and 2018) for Oando Oil Limited. The incentive relates to activities
around manufacturing and distribution of gas and as such, OER extinguished its current income tax
liabilities of N24.6 billion ($68.0 million) for 2017 and 2018. This amount has been recognized as a tax
recovery in the income statement.
Total Borrowings
Total Borrowings increased by 72% to N362.2 billion (compared to N210.9 billion in FYE 2018) due to the
financing of the resolution of the protracted shareholder dispute as stated above.
Shareholders are advised that the Company’s financial results for the year ended 31 December 2019 are
now available on the:
JSE Limited website:
https://senspdf.jse.co.za/documents/2022/jse/isse/untp/oando19.pdf
Full Announcement
This short-form announcement is the responsibility of the Directors of the Company and is a summary of the
information in the full announcement.
Any investment decision by investors and/or shareholders should be based on consideration of the full
announcement, copies of which are also available for inspection at our offices on work-days during business
hours, at no charge:
For further information, please contact:
Ayotola Jagun
Company Secretary
The Wings Office Complex
17a Ozumba Mbadiwe Avenue
Victoria Island,
Lagos, Nigeria.
4
Tel: +234 (1) 270400, Ext 6159
ajagun@oandoplc.com
Adeola Ogunsemi
Group Chief Financial Officer
The Wings Office Complex
17a Ozumba Mbadiwe Avenue
Victoria Island,
Lagos, Nigeria.
Tel: +234 (1) 270400, Ext 6506
aogunsemi@oandoplc.com
Ibukun Opeodu
Investor Relations Manager
The Wings Office Complex
17a Ozumba Mbadiwe Avenue
Victoria Island,
Lagos, Nigeria.
Tel: +234 (1) 270400, Ext 6114
iopeodu@oandoplc.com
Lagos
22 June 2022
JSE Sponsor to Oando
GLOSSARY
“boe/day” barrels of oil equivalent per day
“bbls/day” barrels of oil per day
“mcf/day” thousand cubic feet per day
“bbls” barrels of oil
“boe” barrels of oil equivalent
“US$/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
5
Date: 22-06-2022 02:56:00
Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
