01 November 2016, Sweetcrude, Lagos — Oando Plc recorded a net foreign exchange loss of N5.4 billion in the third quarter of 2016.
The N5.4 billion loss was due largely to the devaluation of Nigeria’s currency and the economic environment.
“The Nigerian economic environment continues to impact our business as we witnessed a further devaluation of the Naira during Q3, 2016, from an average exchange rate of N280.00:$1.00 in Q2 to an average of N316.00:$1.00 in Q3 2016, this has resulted in a net foreign exchange loss of N5.4 billion in the 3rd quarter,” Oando said in statement posted on it website.
Oando explained that for the major part of the year, the company faced operational challenges due to the unrest in the Niger Delta, but finds comfort in government’s discussions and engagement in the region, indicating a possible resolution and gradual stabilise its production.
Despite these economic challenges, the company said “we must highlight our achievements in the 3rd quarter as witnessed by the improvement in our top line revenue as a result of our new business model of a diversified business with higher weighted dollar earnings in both the Upstream and International Trading businesses. This drove revenues up by 96 percent and led to significant foreign exchange gains between the second and third quarters.”
Oando’s Group Chief Executive, Mr. Wale Tinubu, said: “The third quarter witnessed the FGN establish a ceasefire with the militants responsible for production disruptions in the Niger Delta, leading to stabilised daily productions from our assets and expectations of imminent increases to our 2015 production highs of 56kbbls/day.
“We have also been proactive in our cost management initiative to ensure maximised value extraction for every barrel of oil produced as the global oil price still lingers below $50/bbl. We are pleased to have executed a SPA with Helios Investment partners for ~$116 million, representing 49% legal voting rights in the company’s midstream business, of which the proceeds of the divestment will be utilised towards the company’s debt restructuring initiative.
“Our trading business has grown significantly this year having exported over 11 cargoes of crude with volumes exceeding 11mmbbls and an additional 31 cargoes of other oil based products year to date. Our business model of dollar denominated earnings is taking shape as evidenced from the increased revenue line (95% increase) and future increases from the Upstream business through increased daily production rates and export trading businesses through increased lifting’s, with a focus to return our business to profitability by year end.”