November 03, 2015/Oando Plc

The brief dated October 29, 2015 was addressed to Oscar Onyema the chief executive officer (CEO) of the Nigerian Stock Exchange

It reads thus: Further to our recent filings and representations to the Dealing Clerks and employees of the Nigerian Stock Exchange, we write to give a brief summary of the key matters impacting on our full year release for 2014.

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.

This led to us accepting non-cash impairments and currency devaluation charges totalling N185.3Bn:

•          N130.2 Bn in our Exploration & Production business as a result of lower oil prices leading to a reduced valuation of certain exploration and appraisal assets and under-lift receivables owed to us by NNPC.
• ·         N36.4 Bn in our Energy Services business due to reduced drilling activity and reduced day rates accruable to our rig assets.
• ·         N18.7 Bn due to the devaluation of the Naira, which generated a significant foreign exchange loss as we import in dollar denominations and recover our costs in Naira.

While we have impaired certain exploration and near-production assets (mainly legacy assets), our core producing assets have not been impaired in any shape or form.

The upstream company has generated in excess of $500m dollars in cash flows, which has been used as part of our aggressive deleveraging strategy to pay over $400million of debt in the last 12-14 months.

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 and take this opportunity to reaffirm our long-term business viability.

We stand ready for any further clarifications that may be required.