The new realities of lower oil prices needs to be reflected in the valuation of companies, this is according to Oando’s Chief Executive Wale Tinubu.
Tinubu made the comments at the backdrop of the company reporting a record historic loss of 184 billion naira ($924 million) in 2014.
He added, these new realities of low oil prices were reflected in the oil company’s balance sheet and indicated the group’s appropriate positioning.
Tinubu said there were projects Oando PLC had started which the company stopped as it could not continue considering today’s oil prices.
“We have oil blocks that we will no longer put into production which we have as a legacy portfolio, we have resolved to appropriately provide for,” he said.
He also warned over the future prospects in the oil space.
“We are seeking a platform to deal with a challenging future which we see will occur in the near future due to a dwindling exchange rate, increase in interest rate and weak oil price.”
He added that, though it was known that, it was cheap to drill oil in Nigeria, other factors needed to be considered.
“The question is, is it sensible to sanction a project considering the current oil price which we know is not profitable,” he questioned.
“Sometimes it’s better to analyse the risk profile and right off certain assets without long term gains.”
Tinubu said Oando had a convincing value proposition for investors.
“Here is the company (Oando) that has integrity in its financials and has been brave enough to do what is right even when the future of oil price is uncertain,” he said.
“We have also successfully done a major acquisition for 1.5 billion US dollars, paid about 400 million US dollars of debt and generated over 600 million US dollars in cash over the past year.”
Oando is listed on the Nigerian Stock Exchange with secondary listing on the Johannesburg Stock Exchange and Toronto Stock Exchange.