SEC is investigating Oando over ConocoPhillips


Foreign investors in upstream producer Oando Plc have sent a petition to the Securities and Exchange Commission (SEC) regarding their concerns over Oando’s financial statements, according to a report on Channels television.

Why the petition ?

According to the report, the foreign investors who petitioned to SEC against Oando “in relation shareholding structure following the 1.65 billion Dollars cash that Oando paid in June 2014 to acquire the oil production assets of Conoco-Phillips in Nigeria.”

In 2015, Oando Plc announced that it had reached an agreement to buy the minority shares of its subsidiary Oando Energy Resources (OER). OER was its Canadian listed subsidiary. The deal according to Oando is worth about US$13.7 million and implies an equity value for the Company of approximately US$955.3 million (N200b). Oando Group the parent company in Nigeria is worth about N70billion (based on its latest share price). The deal was approved by its shareholders in February 2016.

What could happen to the company’s shares ?

Depending on how serious the investigation is, the SEC could instruct the Nigerian Stock Exchange (NSE) to place Oando shares on full or partial suspension. A full suspension means the company’s shares will not trade. A partial suspension means the share price will be static pending investigation. A planned rights issue by the company will also be placed on hold, pending a clean bill of health from SEC.

First quarter 2017 results from the company show it made a loss before tax of N647 million, while total borrowings were N244 billion. Oando Plc since 2016 has embarked on a sale of stakes in non core assets such as Oando Marketing its downstream arm. Oando shares closed at N8.35 on the NSE, up 77% year to date.

The company recently came under fire from labour unions in the petroleum industry over after its CEO Wale Tinubu, said the company had entered into an agreement with the NNPC for the concessioning of the Port Harcourt refinery in conjunction with Agip. Ibe Kachikwu, the Minister of State for Petroleum and Wale Tinubu has since denied such an arrangement.

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