Oando strategies against falling oil prices
Indigenous oil and gas firm – Oando Plc, has
affirmed moves to strategise against tumbling
world crude oil prices.
The global oil and gas industry is still trying to
get over the recent sharp drop in the oil prices,
which sparked smiles in big petroleum
consumers while wrecking havoc in the world
producers.
The fast plummeting prices of oil are also
projected to come with fierce
ramifications for indigenous oil and gas
firms like Oando.
But Oando, in a press note made
available to The Guardian, said that, “in
the face of lower and increasingly
volatile crude oil prices, we continue to
carefully manage costs and execute low
Capex activity that optimize our overall
production base whilst benefiting from
our hedging strategies.
“We remain committed to working with
our joint venture partners to further
consolidate the assets we acquired last
year and optimize production, whilst
also continuing to implement cost
reduction strategies and prudently
manage our balance sheet.”
Group Chief Executive of the company,
Wale Tinubu, explained that the asset
valuation adjustment compelled some
write downs and impairments that
swung the bottom line to the deficit side.
Analysts explain that on the surface,
nearly N184 billion loss might appear.
Tinubu stated in the notes that “the
magnitude of price drop was large and
unexpected, throwing the industry into a
tailspin: budget deficits, capex
reductions; reduced company market
capitalisations; bankruptcy, job losses;
and asset write-downs totalling billions,
to name a few casualties of this new
reality.
Oando stated in its financial results that
the value downgrade was a one-off
adjustment. It added that the results also
made provisions for the inability for the
company’s partners to pay for over-
lifted oil.
According to market analysts, what is
critical is the ability and chances of the
company to overcome the immediate
challenges and enhance profitability
going forward.
A source at BGL Securities told
journalists in Lagos that the company
remains the best hope for investors
seeking a future in oil and gas equities,
pointing at the company’s meteoric rise
from retail marketing activities to an
integrated energy group bestriding the
full business chain in the petroleum
industry.
He pointed out that reforms in the
domestic economy and petroleum
industry hold significant growth and
revenue potentials for companies like
Oando which, according to him, have
made early bird investments in taking
vantage positions in the market.
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