Oando resolves shareholder dispute, unveils 2019, 2020 results

Oando, Nigeria’s indigenous energy solutions provider has resolved its dispute with an indirect shareholder, Ansbury Investment Inc, thereby releasing its long-anticipated full-year end 2019 and 2020 financial statements.

According to a statement from the company, Oando reported in its 2019 audited financials a loss-after-tax of N207.1 billion largely attributable to impairments for goodwill and loans associated with the indirect shareholder dispute.

Recall that the Securities and Exchange Commission (SEC) suspended Oando’s 2018 annual general meeting (AGM), following a dispute with an indirect shareholder, Ansbury Investment Inc.

The suspension of the company’s 2018 AGM and attendant issues prevented shareholders from being kept abreast of business operations, a move decried on numerous occasions by Oando and its executives as not being in the best interest of the market.

“The settlement of this long-running dispute led to an impairment of N148 billion on financial assets but forms the final resolution and settlement of the dispute with Ansbury, the indirect shareholder whose actions had significantly destroyed shareholder value over the last four years,” the company said in a statement.

Oando noted that the actions of both SEC and the indirect shareholder contributed largely to eroding its stock’s value significantly from its listing price of an average of N9 per share in 2017, to an average N3 per share in 2022.

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“2020 proved to be an unprecedented year for the global economy due to the impact of the novel COVID-19 pandemic. The oil & gas industry was no exception as the year turned out to be one of the most challenging years in its history as we witnessed the lowest oil prices since our sojourn into Nigeria’s upstream sector in 2008, thus negatively impacting our revenue during the period,” Wale Tinubu, group chief executive, Oando plc said.

He noted that the above development resulted in the firm having to impair a portion of the goodwill on Oando’s balance sheet

“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 and non-financial assets. Despite these challenges, our hedging policy and long-term off take contracts ensured our cash flows were not severely stressed during this period,” Oando said.

Oando noted that the price war between Saudi Arabia and Russia that broke out on March 4 due to the collapse of the OPEC+ agreement was a big factor in taking an already-deteriorating situation and turning it into an existential crisis for many companies including International Oil Companies like Royal Dutch Shell, Chevron, ExxonMobil, etc. and indigenous companies like Oando amongst others.

Royal Dutch Shell, ExxonMobil, BP, Total, ENI, Baker Hughes, ConocoPhillips, Chevron, Equinor, Halliburton, and Schlumberger posted a cumulative net loss of $119.2 billion. ExxonMobil posted the largest loss at $22.4 billion, followed by Royal Dutch Shell with a loss of $21.7 billion and BP with a loss of $20.3 billion.

Closer to home companies such as Seplat, another indigenous player had to revalue downwards its oil and gas assets by $114.4million to reflect the lower crude oil prices of 2020 and this reversed the operating profit of US$82.7million to a loss for the year 2020 of $85.3million, the company further incurred a non-cash impairment of $144.3 million.

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