Indigenous energy group, Oando Plc, which is trimming down from rapid bloat, has identified two core business areas that would sustain profitability, aid rapid recovery and lead growth in the medium to long term.
Group Chief Executive, Mr. Wale Tinubu, is quoted by secondary sources as saying that the company’s exploration and production unit, Oando Energy Resources (OER) and its trading arm, Oando Trading, would define the future of the group.
Consequently, he said, the company’s shrink down from bloated size through calculated divestment programme and asset sales are part of the realignment of portfolios which entailed sacrifice of low revenue ends of the business for consolidation of the profit centres.
It was gathered from statements credited to Mr. Tinubu that Oando Plc is looking to boost crude output from next year after a string of asset acquisitions that lay basis for enhanced production numbers.
The company, it was gathered, is working to glean out more production from acquired assets where projections show increased potentials for output. And the oil price recovery and associated return of oilfield vibrancy mean that the company will soon be launching field re-entry programmes to access reserves in acquired assets.
With over 450 million barrels of proven reserves and interests in 14 exploration licences OER is being positioned to drive production growth from current 40,000 barrels per day to over 75, 000 barrels per day in the next five years.
The loan financed asset acquisition, considered one of the most audacious by any indigenous company at the time, plunged Oando into huge debts and forced it to embark on portfolio realignments that entailed disposal of low profit business units.
In a series of partnership agreements with a number of foreign portfolio investors, Oando conceded its controlling interests in its downstream marketing businesses and totally sold off some fringe commercial entities in gas, power and infrastructure.
Revenues from stake sell downs and divestments, according to company sources, went into consolidation of upstream positions and capturing more space in trading. Thus OER and Oando Trading formed the key business areas after the group’s portfolio realignment.
The company has consistently emphasised that it would remain strong in the list of preferred participants in the crude oil term contracts and associated products swap arrangements with the Nigerian National Petroleum Corporation (NNPC).
Crude oil lifting contract for the export of Nigerian crude oil and importation of refined petroleum products for the core businesses of Oando Trading, inside sources explain.