27 JULY 2018 ( Lagos ) : Oando Plc continued to defy expectations as it recorded N8.5 billion profit in its half-year (H1) results ended June 30, 2018, which is an  86% increase from last year ( 2017 ). Of course, the ongoing oil rally ( an obvious consequence of increased demand and reduced supply ) is pushing its growth, but the income tax credit is another major factor for its rather surprising profit increase.This is the company’s 7th quarter consecutive profit.

According to their unaudited results, the turnover of the company grew to 

N297.3 billion from N267 billion recorded in H1 2017 which a 11.36% increase. The cost of sales marginally increased by 5.45%. Consequently the Gross Profit skyrocketed by 52.5% reaching N51 billion compared to N33.4 billion earned in H1 2017. 

Now, the interesting part of the financials, the operating profit dropped by 5.12%, and with no absolute change in the financial costs, the financial income only minor-ly increased by 9.8%. It reported a PBT loss of 2.2 billion as compared to a PBT loss of 839 million in H1’2017, Hence the PBT loss shot up by 169%. But, an income tax credit increase of a whopping 1510% became the savior and turned the financials in a positive direction. This resulted in a loss after tax of 171 million reported in H1’17 drastically change to a profit after tax ( PAT ) of 8.4 billion in H1’18. Consequently, the profit increased by 86% dramatically going from  N 4.6 billion in H1’17 to N 8.5 billion in H1’18. It also witnessed an exasperating increase in its total comprehensive profit by 224%, from N 4.4 billion to N 14.3 billion.

In its upstream business, Oando recorded a net profit increase of 66.2% to N27.1 billion or $75.2 million, from N16.3 billion or $53.2 million in the comparative period of H1 2017.The hike in the cost of oil and gas commodities caused higher revenues, and as a result higher net income. This coupled with the resolution of Joint Venture funding challenges with the Nigerian National Petroleum Corporation (NNPC) has driven increased investment in the upstream sector.

Brent prices averaged $69.87 per barrel, which amounts to a 38 per cent increase in realised crude selling price compared to the same period in 2017.

Oando’s scorecard was further buoyed by sale price increases of 19 per cent for Natural Gas Liquids (NGL) and 13 per cent for natural gas deliveries. 

Oando Trading (OTD), its trading segment is helping Oando increase its market share in the downstream sector. About 8.1 million barrels ( by volume ) were traded in H1’18, with a total of 6.6 million barrels of crude oil and 195,497 Metric tonnes (MT) of petroleum products traded in same period. Oando is NSE’s top 30 most capitalized stock.

FG’s announcement of outstanding subsidy payments due to various companies including Oando caused the company’s share price to surge by 9.8 per cent.

Speaking about the segment results ( including discontinued operations ), the Exploration and production (which is involved in the exploration for and production of oil and gas through the acquisition of rights in oil blocks on the Nigerian continental shelf and deep offshore), observed a total gross segment sale increase of 56.3% and a 46.3% uptick in its PAT. While its Supply and Trading (involved in trading of crude refined and unrefined petroleum products.) witnessed a 465% increase in its operating loss and and 128% increase in its loss after tax.

In spite of being caught in the middle of a very interesting indirect shareholder dispute and the trouble of a pending SEC forensic audit, the company has posted some pretty convincing results. 

On a different note, Oando, Nigeria Agip Oil Company (NAOC), Shell Petroleum Development Company (SPDC) and other aboriginal and international oil companies in partnership with the Nigerian National Petroleum Corporation (NNPC) signed an agreement to implement Gas Projects called ‘Seven Critical Gas Development Projects (7CGDP)’ worth $3.7 billion. The main motive of the project is to bridge the gas supply shortfall in the country.

Reporting for EasyKobo on Friday, 27 July 2018 in Lagos, Nigeria