Following the global oil price crash that has seen Brent Crude decline by as much as 60%, Oando Plc said it has decided to cut down on its CAPEX and operating costs.
These are some of the immediate changes the Nigerian oil company is making in a bid to cushion the effects of the economic fallout from the oil price crash. Earlier, the company ensured to hedge all of its barrels just as a precautionary measure.
Oando’s Chief Operating Officer, Ainojie Alexander Irune, disclosed all these earlier this week when he joined CNN’s Julia Chatterley to talk about the global oil price crash and the effects on the Nigerian economy.
When asked to explain whether Oando Plc is financially capable to cope in the meantime pending when the oil market would bounce back, Irune said:
“You’re right to some extent Julia, I think you would see some casualties along the way. What we must do is stay optimistic. I know for most Oil Producers currently, there are costs that as Independents, we have very little control over, so if I break down that operating cost for you, there is a 20-40% that sits out of our control in terminally fees, transportation fees for crude, we have very little control over that. As Independents, our human resource, our payroll, operations largely; is where we look to make those cuts and of course the capital side.
“To your point, will this be enough? I think the question is the price of oil. We’re seeing an uptick in the price, we are seeing the decision by OPEC to cut 10 million barrels come in to realise the intention of OPEC; they’ve taken that huge step. But more importantly, the Government is stepping in to ensure that Independents like ourselves are engaged in conversations to ensure that process of survival, which is indeed a process for us, unknown as well, is managed jointly, to see that it takes the least amount of time to see a recovery.”
Oando is yet to release its 2019 FY results as at May 2020. In its 2019 9 months’ results, profit was N13 billion compared to N10.3 billion a year earlier. Nairametrics expect a robust 2019 results but expect a sharp drop in the first quarter in 2020. Oando share price fell to an all-time low of N2 per share before rising to N2.65, one of the better performances.