Impairments cripple Oanda as oil prices fall

OANDO, the largest indigenous oil and gas producer in Nigeria, announced impairments of 185 billion naira (R8.77bn) for last year as the value of its assets dropped amid plunging crude prices.

The company, listed in Johannesburg and Lagos, wrote down 130bn naira in its exploration and production division and 36bn naira in its services arm because of a decline in the value of its oil rigs, said chief executive Adewale Tinubu in a letter dated October 29.

The letter was posted on the Nigerian Stock Exchange’s website yesterday. Oando also took a 19bn 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 said 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.”

Last month Oando revealed a loss for 2014 of 181bn naira. That compared with a 1.4bn naira profit in 2013.

The company also said it lost 13bn naira between July and September this year, following losses in the first and second quarters.

In a separate statement yesterday, the Nigerian bourse said it was “greatly concerned” by Oando’s late release of its 2014 annual results.

The exchange added that it was reviewing the situation and had 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 August 31, to 6.51 naira just before lunchtime in Lagos, paring this year’s decline to 60 percent.

Tuesday’s rise, which snapped a seven-day decline, was not linked to the impairment losses.

These were already factored in to the 2014 results, according to Pabina Yinkere, an equity analyst at Vetiva Capital Management.

“What we’re seeing is just a relief rally from last week’s significant losses,” Yinkere said in Lagos, Nigeria’s commercial capital. – Bloomberg

R8.77bn Impairments for last year at Nigerian oil and gas producer