Nigeria-based energy group Oando is targeting a return to profitability for the 2016 financial year, after its after-tax loss for the six months ended June 30, narrowed 23% to N27-billion, compared with a loss of N35-billion in the first half of 2015.
This followed a loss of N56.57-billion in the 2015 financial year and a loss of N66.5-billion in 2014.
CEO Wale Tinubu on Tuesday commented that the first half of the year attested to the “deplorable state” of security in the oil and gas environment in Nigeria, with the company having experienced a 25% decline in production volumes arising from increased disruptions owing to militant activities.
“On a positive note, the company has benefited from the implementation of the oil price hedge, which has helped to calm the effects of the disruption of production activities and aided in the rapid paydown of $900-million,” he said.
Meanwhile, the dual-listed company said operating challenges in the Niger Delta had also occasioned a 25% reduction in daily production volumes from 56 000 barrels of oil equivalent per day (boepd) in the first half of 2015 to 45 000 boepd in the first half of this year.
To mitigate the disruptions to gas supply caused by unrest in the Niger Delta, Oando has issued an expression of interest for the supply of liquefied natural gas (LNG) through floating storage and regasification units, mobile/modular onshore LNG and other similar solutions.
This will provide an alternative source of gas to ensure the nation has adequate power supplies.
As the global economic challenges persist, Oando has also been affected by the low commodity prices of $50/bl.
“We have taken action by converting $133-million of liabilities on our books to N38.6-billion, which are currently being serviced by naira, hence leaving only dollar denominated liabilities to be serviced by our dollar earnings,” the company stated.
In the period under review, it executed 70% of its asset disposal target and 100% of its refinancing target.