• Thursday, May 23, 2024
businessday logo


Oando releases delayed 2022 financial results, says on track to clearing backlog

Oando to delist as core investor plans buyout of  minority shareholders

Oando, one of Nigeria’s indigenous energy solutions provider, published its Full Year Ended (FYE) December 31, 2022, financial results Monday.

The company said in the release of its FYE 2022 results indicates that it is finally on track to becoming fully compliant with regulatory obligations by publishing all its outstanding results.

In its downstream business, Oando sold approximately 21.8 million barrels of crude oil under various contracts with NNPC Ltd., a 25% increase from FY 2021 at 17,445,255 million barrels of crude oil and delivered 1,937,833 MT of refined products compared to 962,371 MT of refined products in FY 2021, Oando said in a statement Wednesday.

According to the statement, Oando’s average daily oil production in the upstream business decreased by 23% to 20,703boe/day from 26,775 boe/day in 2021. In 2022, the Company’s production consisted of 4,939bbls/day of crude oil as against 8,849bls/day FYE 2021, 472bbls/day of NGLs and 15,292boe/day of natural gas as a result of production downtimes from shut-in due to repairs and persistent sabotage activities.

“The heightened militancy and pipeline vandalism acts within the Niger Delta region dealt a substantial blow to our upstream operations, resulting in a marked reduction in our crude production volumes due to the protracted shut-ins for repair following each incidence. This was further compounded by a major gas plant fire incident, which also necessitated a lengthy downtime,” Adewale Tinubu, the group chief executive, Oando PLC, said in the statement about addressing operational challenges faced during the reporting period.

“Whilst the Company has reported a loss after tax position, it’s important to note that the numbers do not reflect the Company’s current reality and external environment; stakeholders should look forward to its FYE 2023 and 2024 interim results for a more realistic view of the Company’s operational outlook and external environment,” Oando added in the statement.

It explained that major contributor to the Company’s significantly reduced production levels, as highlighted by the Group Chief Executive, was heightened militancy and pipeline vandalism. Oando, alongside other major International Oil Companies (IOCs) and indigenous companies, were impacted by this. Due to crude oil theft, Nigeria lost a staggering $1 billion in revenue in the first quarter of 2022. According to Gbenga Komolafe, the Chairman of Nigerian Upstream Petroleum Regulatory Commission (NUPRC) only about 132 million barrels of the 141 million barrels of oil produced in the first quarter of 2022 were received at export terminals.

It was reported in reported in 2022 that Austin Avuru, founding MD/CEO of Seplat Energy and Executive Chairman AA Holdings, warned that Nigeria’s oil production has reached an emergency critical status. He stated that some oil production wells don’t get to see 80% of production making it to the terminals due to oil theft. The theft resulted in the Bonny Oil & Gas Terminal, a pipeline that transports crude from the oil-rich Niger Delta to export vessels, among other places, declaring a force majeure, which made the atmosphere unfriendly and discouraging for investors.

Speaking at the 2022 Nigeria International Energy Summit (NIES 2022), the Chairman of Shell Companies in Nigeria, Dr Osagie Okubor, said the 180, 000 barrels per day Trans Niger Pipeline had remained shut for more than one year – March 2022 to March 2023. The loss from March 2022 to March 2023 brings the total shut-in/loss to about 65,700,000 barrels. Brent crude price averaged about $83 per barrel from March 2022 to March 2023, meaning the country lost as much as N2.3tr to the menace.

2023 saw Oando record positive highlights, including the announcement of its intent to acquire the Nigeria Agip Oil Company Limited (AGIP) from Eni, the successful completion of the Proof-of-Concept phase of its Electric Mass transit buses and the commencement of the Pilot Phase in partnership with the Lagos State Government, its collaboration with the Edo State Government for the establishment of a pioneering 175 MW wind power plant in Benin; signalling that amidst the challenging environment, the Company continues to look for innovative ways to create value and increase revenues. Whilst the 2022 results are not indicative of the Company’s future, corporate actions taken in 2023, specifically those that will positively impact crude oil production, speak to a promising future for the indigenous giant.

Speaking to the future, Adewale Tinubu said; “In response, we have put in place definitive measures to bolster our production and cash inflows towards ensuring a speedy return to profitability by collaborating with our partners to institute a comprehensive security framework aimed at permanently curbing the persistent pipeline vandalism whilst concurrently exploring inorganic growth opportunities to increase our reserves and production capabilities. We have also implemented a strategic restructuring of our key facilities to ensure they align with our cash flow dynamics.”