Oando earnings trickle higher
Apr 12 2010 17:58
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Johannesburg - Nigerian integrated energy company Oando reported diluted headline earnings per share of 8.39 US cents for the year ended December.
The company reported an after tax profit of $75.91m for the 12 months compared with $74.54m the previous year.
This was despite turnover for the year reducing by 15% to $2.3bn, which Oando said was due mainly to uncertainties in the government policies about deregulation of the downstream sector of the petroleum industry and a delay in the payment of the petroleum subsidy by the Nigerian government.
The group said that the drive towards portfolio diversification had continued during the year with efforts at monetising the strategic investments in upstream, rigs and natural gas pipeline assets.
"For the upstream business, revenue generation during the year came only from OML 125 & OML 134. However, significant investments have been made in OML 90 and OML 56 towards completing outstanding issues required for bringing the assets into production.
"We expect that these developments will be completed in 2010."
In order to further enhance its upstream portfolio, the group acquired controlling interest in Equator Exploration Limited (EEL) during the year. EEL owns various assets in the Niger Delta region of Nigeria and the Joint Development Zone (JDZ) of Sao Tome and Principe.
"We continue to collaborate with relevant partners to quickly bring these assets into income generation mode while exploring opportunities for further acquisition of more producing assets. We are confident that these efforts will further boost contribution of upstream business to the Group's revenue and profitability in the near term," Oando said.
'Confident of achieving accelerated growth'
The contribution of the gas and power arm of the business to the group's revenue increased significantly during the period. This was because of additional capacity provided by the recently completed Greater Lagos Phase 3 pipeline project as more customers were connected to the supply grid in 2009.
"We expect additional customers to be connected in 2010 which will further improve gas revenue. In addition, construction work at the Eastern Horizon Company's 128km pipeline project is progressing steadily. The 12.15MW captive power plant constructed to generate and sell power to Lagos State Water Corporation (LSWC) has been completed and undergoing necessary test runs and statutory approvals. We expect the plant to be commissioned during the first quarter of 2010."
Oando said it expects the Federal Government of Nigeria to announce a definite position on the deregulation of the downstream sector of the petroleum industry soon and also promulgate the draft Petroleum Industry Bill (PIB) before the National Assembly into law.
"In spite of this and the attendant uncertainties on our downstream marketing business, we shall ensure that our business remains competitive, by improving customers' retention and efficiency in working capital management. Our Supply & Trading business will also consolidate its aim of dominating the West African market. We shall also seek to increase our share in the deregulated products' market.
"Efforts will be made to reduce importation under PSF to the barest minimum and improve relationship with relevant stakeholders to ensure prompt settlement of PSF (Petroleum Support Fund) claims.
"Our Energy Service business has launched itself into the swamp rig business by deploying one of its rigs to operational use in a drilling contract with Agip Exploration. The second rig is at advanced stages of being mobilised for operational use. We expect to bring two additional rigs into operation in 2010 while others will be fully ready to be put into use. With all these investments, we are confident of achieving accelerated growth in the Group's revenue and profitability from 2010," Oando added.
- I-Net Bridge
