JSE-listed Nigerian energy group Oando reported a solid financial footing for the first half of the year on the back of higher oil prices as a direct consequence of increasing demand and lower supply.

Higher oil prices, and the resolution of joint venture funding challenges with the Nigerian National Petroleum Corporation, have driven increased investment in the upstream sector.

“This stable operating environment, coupled with Oando’s fiscal prudence, has reinforced our solid financial footing as we continue to build on the momentum garnered in 2017,” confirmed Oando CE Wale Tinubu.

The company’s turnover increased by 11% to N297.3-billion, compared with N267-billion in the first half of 2017.

Gross profit increased by 53% to N51-billion, compared with N33.4-billion in the first half of 2017. Profit after tax increased by 86% to N8.5-billion, compared with N4.6-billion in the first half of 2017.

The first half of this year picked up on the back of the industry recovery witnessed in 2017. Brent prices averaged $69.87/bl, resulting in a 38% increase in realised crude selling price compared with the same period in 2017.

Performance was further buoyed by sale price increases of 19% for natural gas liquids and 13% for natural gas deliveries.

Oando Energy Resources recorded a cumulative production of 6.8-million barrels of oil equivalent compared with 7.2-million barrels in the same period of 2017, primarily owing to storage constraints and downtime on Well 7 at the company’s Ebendo field in OML 56.

“We also witnessed reduced gas production due to shut-ins suffered at OML 60 to

63 as a result of repairs and maintenance,” said Oando.

Capital expenditure (capex) of $24.7-million, or N8.9-billion, was invested in the first half of the year, compared with $15.9-million, N4.9-billion, in the first half of 2017. This was mainly maintenance capex focused on drilling activities and facilities maintenance, as well as exploration-related activities.

In conclusion, Oando said, this year has witnessed a much healthier oil industry, recovering from the last few years of low prices, enforced capital discipline, productivity efficiencies and portfolio realignments.

“We will continue to drive growth and profitability through our dollar-earning portfolios. Our plans in the upstream involve production growth through investment in targeted profitable projects, while maintaining fiscal prudence, to ensure we

remain less sensitive to short-term price fluctuations.

“In our trading business, current plans for growth include expansion of our trading structures in Africa, capitalising on expanding scope in Southern and East Africa, as well as developing key supply mechanisms into the Middle East and North Africa,” Oando stated.