Oando of Nigeria Reports $938 Million Oil, Currency Writedownsby
CEO Tinubu says company to focus on reducing debt burden
Shares gain on `relief rally,' paring 2015 fall to 60 percent
Oando Plc, the biggest indigenous oil and gas producer in Nigeria, announced impairments of 185 billion naira ($938 million) for last year as the value of its assets dropped amid plunging crude prices.
The company, listed in Johannesburg and Lagos, wrote down 130 billion naira in its exploration and production division and 36 billion naira in its services arm because of a decline in the value of its oil rigs, Chief Executive Officer Adewale Tinubu said in a letter dated Oct. 29, which was posted on the Nigerian Stock Exchange’s website on Tuesday. Oando also took a 19 billion naira hit for foreign exchange losses.
“With global upstream players forced to record significant reductions in the fair value of their asset portfolios in the last 10 months, we are no exception,” Tinubu wrote in the letter. “As we gradually exit our investment phase, we remain committed to shoring up our balance sheet, significantly reducing our interest burden, returning the company to profitability.”
Oando revealed a loss for 2014 of 181 billion naira last month. That compared with a 1.4 billion naira profit in 2013. The company also said it lost 13 billion naira between July and September this year, following losses in the first and second quarters.
In a separate statement on Tuesday, the Nigerian bourse said it is “greatly concerned” by Oando’s late release of its’ 2014 annual results and the exchange is reviewing the situation and notified the country’s Securities and Exchange Commission. Companies listed on the bourse are meant to announce full-year numbers within 90 days of the period ending.
The company’s shares rose 8.7 percent, the most on a closing basis since Aug. 31, to 6.51 naira at 12:41 p.m. in Lagos, paring this year’s decline to 60 percent.
Tuesday’s rise, which snapped a 7-day decline, was not linked to the impairment losses, which were already factored in to the 2014 results, according to Pabina Yinkere, an equity analyst at Vetiva Capital Management Ltd.
“What we’re seeing is just a relief rally from last week’s significant losses,” Yinkere said by phone from Lagos, Nigeria’s commercial capital.