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Oando shares still on bid amidst technical suspension

Peter Egwuatu
OANDO Plc shares are still on demand (bid)   in the stock market even as the Nigerian Stock Exchange (NSE)  placed a technical suspension on the company  following its application to float a combination of rights issue and bond.

The positive demand of the shares of the company implies that  the existing shareholders are unwilling to sell their shares to willing buyers. Ordinarily this would have fueled a jump in the share price of Oando as demand for the shares are greater than supply ,but for the technical suspension, the price still remains at N93.99 per share at the stock market.

Vanguard gathered that  most of the shareholders are not willing to sell their shares at N93.99 per share since they believe that the price is undervalued given the  rapid growth of  virtally all the performance indicators of  the company in recent time .

According to stockbrokers “ They are also confident with the management of the company as gains from its massive investments have started manifesting.

”The company paid a total dividend of N6.00 per share to its shareholders in the last Annual General Meeting (AGM)  held in Uyo, Akwa Ibom State , having earlier received N3.00 per share as interim dividend. “They are hoping  that the company will surpass the current dividend next year” said brokers.

Meanwhile, it is expected that existing shareholders of Oando Plc will inject about N21 billion into the company’s operations via a right issue.

It should be noted that Oando formally applied to the NSE recently, to make a rights issue of about 301.694 million shares at N70 per share to raise the funds. In addition, the company plans to float a bond to raise N100 billion from the Nigerian capital market.

As a result of the application, the management of the NSE had placed the shares of  the company on technical suspension at N93.99 per share. This implies that the shares of the leading integrated energy company would be traded at the market at N93.99 through out the duration of the rights issue.

At the close of trading on Tuesday, investors exchanged about 15 millin shares of  Oando worthN1.427 billion in 10 deals. It would be recalled that shareholders  of Oando has last August approved a fresh capital injection to sustain its leadership position and deliver higher returns to all stakeholders.The Group Chief Executive of Oando, Mr. Wale Tinubu, had explained that  the company had been  structured in way that  can enable it successfully raise capital from mixed sources both locally and internationally.

“The way to sustain the growth of our business is to have the right technical, managerial and financial resources. Now we have both technical and managerial resources. What we need now is finance to support our growth and future plans,” he said.

According to him,  the company has diversified from petroleum product marketing to upstream, explaining that the company is currently executing 124 kilometre pipeline construction from Uyo to Calabar.He added that  Oando has acquired five rigs for drilling of crude oil in the upstream sector of the oil industry, just as it has begun phased implementation of its  refinery project located in  the Lekki Free Trade Zone, Lagos.

Oando had posted  a turnover of  N339 billion for the year ended December 31, 2008, showing an increase of  83 per cent from N186 billion in 2007. Gross profit rose by 59 per cent from N7 billion to N11 billion, while net profit rose by 52 per cent from N5.48 billion to N8.34 billion. A final dividend of Shareholders received a dividend of N5.4 billion or N6 per share.

The company is banking on its gas business to boost shareholder value. Apart from its activities in Nigeria,  Oando was recently  selected as a strategic partner to the Ghana National Petroleum Corporation (GNPC) to develop assets and infrastructure to harness the gas that will be produced from  the country’s offshore Jubilee Oilfield, which is rated as West Africa’s current largest offshore deepwater discovery in over a decade.The oil field has reserves in excess of 300 million barrels of recoverable oil and a potential for 1.8 billion barrels.

Speaking on the development, Tinubu said, “We are very proud to be part of this historic milestone in Ghana’s oil and gas exploration.

The Jubilee oilfield is set to further transform the Ghanaian economy and position the country as a key player in the Gulf of Guinea. The choice of Oando is an affirmation of our track record at project delivery and creates an opportunity for us to extend the success recorded in building Nigeria’s gas distribution pipeline system to other parts of West Africa.This is a fillip toward our drive to become the foremost energy company in sub-Saharan Africa.”


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