Oando Plc · The information presented herein is based on sources which Oando Plc (“Oando”)regards dependable. This presentation may contain forward looking statements. These

Full Year 2010 Conference Call 1

Oando PlcFYE 2010 Review


neCautionary statement

The information presented herein is based on sources which Oando Plc (“Oando”) regards dependable.

This presentation may contain forward looking statements. These statements concern or may affect future

matters, such as Oando’s economic results, business plans and strategies, and are based upon the current

expectations of the directors. They are subject to a number of risks and uncertainties that might cause

actual results and events to differ materially from the expectations expressed in or implied by such forward

looking statements. Factors that could cause or contribute to differences in current expectations include,

but are not limited to, regulatory developments, competitive conditions, technological developments and

general economic conditions. Oando assumes no responsibility to update any of the forward looking

statements contained in this presentation.


ne

Contents

1. Operating Environment

2. Company Overview

3. FY 2010 Performance Review

4. Divisional Performances

5. Strategic Road Map

6. Q&A


Steady Oil Production Volumes and High Crude Oil Prices

40

60

80

100

120

2

2.1

2.2

2.3

2.4

2.5

2.6

Domestic Production Crude Oil Price (Bonny Light)

Operating environment

• Benign macro environment driven by strong GDP growth rate, healthy reserves, stable exchange rates and a high yield market (towards Q4’10)

• Nigeria’s 2010 real GDP growth rate at 7.85%, stands tall among African, Emerging and Developed Market peers

• Growth was buoyed largely by contribution from the non – oil sector (Agriculture – 40%, Wholesale & Retail Trade – 24.3%, Manufacturing (18.7%), and supported by an improved Oil sector (15.4%)

• The improvement in the Oil sector was driven by steady oil production volumes (avg. 2.42mbpd) on the back of relative calm in the Niger Delta, and rising global crude oil prices (avg. $80.86/barrel)

• While the increasing land under cultivation, healthy rainfall pattern, and the rise in commodity prices provided a boost to the Agricultural sectorl

Strong GDP growth

Source: Central Bank of Nigeria (CBN)

2.90%

10.60%

6.00%

3.00%

6.60%7.85%

1.40%

0%

2%

4%

6%

8%

10%

12%

United States

China Egypt South Africa

Ghana Nigeria United Kingdom


Operating environment

147148148149149150150

20000

25000

30000

35000

40000

45000

31

/12

/09

31

/01

/10

28

/02

/10

31

/03

/10

30

/04

/10

31

/05

/10

30

/06

/10

31

/07

/10

31

/08

/10

30

/09

/10

31

/10

/10

30

/11

/10

31

/12

/10

Foreign Reserves Exchange Rate

5.5

5.7

5.9

6.1

6.3

6.5

0

5

10

15

20

Inflation Interbank Rate Monetary Policy Rate (MPR)

Inflation triggers hike in Monetary Policy Rate (%)

Healthy Reserves ($/bbl) & Stable Exchange Rate (N/$)• Foreign Reserves closed 2010 at $32.35 billion, losing c.31% from its opening level due to withdrawals from the Excess Crude Account (ECA), payment of oil subsidies, and supply of FX at the bi – weekly auctions to fund imports. However, it is important to note that reserves at these levels can finance 12 months of imports

• Despite short-term volatilities, the exchange rate remained steady within the Central Bank of Nigeria (CBN) stated band of N150/US$(+-3%)

• Inflationary pressures became evident in 2010 with headline inflation peaking at an all time high of 15.6% in February.

• The Monetary Policy Committee (MPC) signaled the reversal of Quantitative Easing (QE) in September by policy tightening, the first rate increase in 18 months.

Source: Central Bank of Nigeria (CBN)


neOperating environment

• Petroleum Industry Bill (PIB): Optimism of the passage of the PIB was thwarted again due to the non –consensus of the various parties to the clauses in the bill. One of the major objectives the bill seeks to achieve is for the IOCs to cede unutilized acreages to the smaller upstream companies through a market-based mechanism. There is little hope however, that this bill will be passed before the expiration of this administration on May 29

• Deregulation: Consensus for deregulation seems to be mounting but the actual switch remains elusive. Subsidy burden to the Federal Government in 2010 was c.US$3 billion, and already US$1.34 billion in Q1’11. The issuance of Sovereign Debt Notes to importers of petroleum products was however introduced in May 2010 and this has improved the payment cycles of the Federal Government

• Power Sector Road Map: Government’s overhaul of the power sector is gradually coming into fruition with the unveiling of the power road map in August 2010. In this road map, the 6 power generation and 11 distribution companies of the PHCN are to be privatized through the sale of 51% equity stakes to potential investors which signals the need for private sector involvement. The current tariff structure, the Multi Year Tariff Order (MYTO) which became effective in July 2008 however remains a disincentive to investors. The MYTO has been reviewed and we expect the new electricity tariff structure to be announced in May

• Gas Master Plan: In a bid to attract investment flows for the development of domestic gas infrastructure, the Government in March launched the Gas Master Plan. Under this plan, the President expects domestic gas supply to increase from the current 1 billion cubic feet per day (bcf/day) to 10bcf/day by 2020


Company overview

• Oando is the largest publicly quoted energy company in Nigeria and sub-Saharan Africa’s largest indigenous energy company, based on revenues

• Headquartered in Lagos, Nigeria

• Primary listing on the Nigerian Stock Exchange with a secondary listing on the Johannesburg Stock Exchange

• Commenced business as a petroleum marketing company in Nigeria in 1956

• Oando has since diversified across the full value chain of the oil and gas spectrum. Integrated across

• Upstream through Oando Exploration & Production and Oando Energy Services

• Midstream through Oando Gas & Power

• Downstream through Oando Marketing, Oando Supply & Trading and Oando Refining & Terminals

Sub-Saharan African Listed Energy Peers by EV ($m)

Source: Bloomberg as at 1-Apr-2011.

1110

2720

472142 109 90 44

Oando Afren AP Conoil MRS ERHC Eterna Oil


Company overview

Upstream Division Midstream Division Downstream Division

Exploration &Production

EnergyServices

Gas &Power

Supply &Trading

Marketing

Desc

rip

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Fu

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ea

r

20

10

Fin

an

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ls(N

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s)

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y

Asse

ts

Ma

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ion

(a

)

• Largest swamp drilling fleet in Nigeria

• Rapidly expanding business line

• Primary assets are located in Nigeria

Revenue 15,534

EBITDA 4,928

PAT (543)

Revenue 19,494

EBITDA 9,761

PAT 2,304

• 5 swamp rigs: 2 Working Assets and 3 under refurbishment.

• Drill bits and engineering services

• Total fluids management.

• Producing assets: OML 125 & OML 56.

• Development & appraisal: OML 134, OML 90 & OPL 236.

• Exploration: OPL 278, OPL 282, OPL 321, OPL 323, OML122 & JDZ

#1A leading indigenous player

• First private sector company to enter gas distribution in Nigeria

• Consists of Gaslink Nigeria Limited, Akute Power and East Horizon Gas Company Limited.

Revenue 17,446

EBITDA 5,451

PAT 2,884

• 100 km gas distribution pipeline in Lagos.

• 128 km gas pipeline in the East of Nigeria spanning Akwa Ibom and Cross River states.

• Akute captive Power Plant

• Riv Gas.

#1

• Nigeria’s leading retailer of refined petroleum products with ~20% market share

• Large distribution footprint with access to over 1,980 trucks and 159.5m litres storage capacity.

Revenue 175,645

EBITDA 7,652

PAT 3,936

Revenue 309,333

EBITDA 6,008

PAT 4,800

• 600+ retail outlets in Nigeria, Ghana and Togo

• Eight terminals (159.5ML)

• 3 Aviation fuel depots

• Two lube blending plants (55m litres / annum)

• Seven LPG filling plants

• Trading desks in Nigeria and Bermuda.

• Trading consultants in the UK and Singapore.

• Largest indigenous supply and trading player in the sub-Saharan region

• ~25% market share in private PMS importation in 2010.

#1 #1

Oando is the leading indigenous oil and gas player in Nigeria

Note: Individual division financials do not add up to Group figures due to intra-group transactions and other smaller companies included in consolidation.


Resilient Performance, Amid Challenging Environment

80%

17%

42%

Profit before tax of N24.3 billion

Profit after tax of N14.4 billion

EBITDA of N30 billion

31 Dec 10N’000

31 Dec 09N’000

Increase/Decrease

Turnover 378,925,429 336,859,678 12%

Earnings before interest, taxation, depreciation & amortization (EBITDA)

30,066,302 25,338,045 19%

Profit before tax 24,318,844 13,512,155 80%

Tax 9,943,878 3,415,176 191%

Profit after tax 14,374,966 10,096,979 42%

Adjusted earnings per 50k share (Kobo)

931 558 67%

Fixed assets 152,467,117 131,713,072 16%

Net assets 95,225,406 53,319,124 79%

Number of 50k shares issued and fully paid up (‘000)

1,810,169,256 905,084,628 100%


“These results underscore the resilience of our integrated business model, which leverages scale, diversity and market leadership to consistently deliver in the face of our challenging operating environment.

We stand positioned to maximize the opportunities presented by the rapidly evolving legal framework of the upstream sector in Nigeria and will partially divest our marketing business to contribute to the financing of our investment drive in producing assets, whilst ramping up production in our existing portfolio. We look forward to the deployment of two additional swamp rigs into operations and in the midstream division, commission our 128km South Eastern pipeline as well as the commencement of the Greater Lagos phase 4 development.

As we roll out our pipeline of initiatives, 2011 and beyond promises to be exciting years of growth and substantial value creation for our shareholders.”

Wale Tinubu, Group Chief Executive

Our Strategy Remains Unchanged

• Our integrated business model is the most appropriate for our shareholder value in the short to long term.

• The model has enabled us:• Diversify our income streams• Leverage on opportunities that have arisen

along our energy value chain

2011 Execution Priorities

• Enhance production from producing assets and conclude a major acquisition from an International Oil Companies (IOC).

• Fully contract rig fleet to IOC.

• Complete ongoing gas pipeline projects and launch the development of 2 new franchises.

• Divestment of Marketing Business


FY 2010 performance review

• Commissioning of the 12.15MW Akute Power Plant in March 2010

• Additional customer connects for our gas and power business

• Twelve months of operation from our first rig (Integrity) in 2010 compared to five months of operations of the rig in 2009. Our second rig (Teamwork) also contributed to turnover after deployment in April 2010

• Full year production of the Upstream assets (OMLs 56 and 125), and crude oil price gains

• A 10% volume increase in the downstream division

• Additional operating expenses attributable to the Akute Power Plant.

• Operational expenses arising from twelve months operation of two rigs when compared to five months operation of one rig in 2009

• Reduced debt position due to the success of the Rights Issue exercise, which raised N21 billion in Q1, 2010

• Lower interest rates experienced throughout 2010

• The restructuring of N60 Billion in short-term loans into a 5-year Medium Term Note facility

+13%

Revenue

+24%

Admin Expenses

-51%

Interest Payable


Resilient Performance, Amid Challenging Environment

80%

17%

42%

Profit before tax of N24.3 billion

Profit after tax of N14.4 billion

EBITDA of N30 billion

31 Dec 10N’000

31 Dec 09N’000

Increase/Decrease

Turnover 378,925,429 336,859,678 12%

Earnings before interest, taxation, depreciation & amortization (EBITDA)

30,066,302 25,338,045 19%

Profit before tax 24,318,844 13,512,155 80%

Tax 9,943,878 3,415,176 191%

Profit after tax 14,374,966 10,096,979 42%

Adjusted earnings per 50k share (Kobo)

931 558 67%

Fixed assets 152,467,117 131,713,072 16%

Net assets 95,225,406 53,319,124 79%

Number of 50k shares issued and fully paid up (‘000)

1,810,169,256 905,084,628 100%



• Additional capital expenditure on OML 90, OML 56, East Horizon Gas Company’s 128Km natural gas pipeline and the refurbishment of the third rig in preparation for operational deployment in 2011

• Revaluation surplus arising from the triennial revaluation of property, plant and equipment

• Receipt of higher inventory of petroleum products by the supply and trading subsidiary towards the end of the Q4, 2010. Comparative period in 2009 witnessed suspension of imports due to accumulated PSF debts and uncertainties about deregulation

• Reduction in borrowings and utilization of own cash and bank balances to fund investments

+16%

Fixed Assets

+132%

Inventories

-53%

Cash & Bank



• Improvement in payment to creditors, which was facilitated by receipts from debtors and cash generated from operations

• Successful restructuring of short-term debts to long-term borrowings

• Additional capital through rights issue and share premium.

• Impact of current year’s profit and dividend paid to shareholders during the year

-26%

Trade Creditors

-49%

+80%

Short Term Borrowing

Capital & Reserves



Divisional performances

• Production from Abo field in OML 125 came in above forecast average production for the year (averaged 30,000 bopd in the last quarter of 2010)

• Increase in total average daily production to 4,500bopd

• Refinancing of bank facilities, thereby improving working capital position

• Improvement in our evacuation efficiency by completing Oboduguwa Obodeti evacuation pipeline which aided migration from a trucking procedure

Profit and loss

2010 2009NGN millions

Revenues 19,495 12,221

Revenue Growth 60%

Gross Profit 13,274 10,827

Gross Margin 68.1%

EBITDA 9,761 9,971

EBITDA Margin 50.1%

PBT 6,860 1,935

PBT Margin 35.2%

Net Income 2,304 1,075

Net Income Margin 11.8%

Comment Selected Data


Profit and loss


Revenues 15,534 7,109

Revenue Growth 118%


Gross Margin 67.2%

EBITDA 4,928 1,538

EBITDA Margin 32.0%

PBT 332 (661)

PBT Margin 31.7%

Net Income (543) (798)


EnergyServices

• Second rig, OES Teamwork, commenced operations in March 2010.

• Utilization rate of this rig was a remarkable 98.5%

• OES Integrity continued to deliver critical wells in accordance with the client’s 2010 drilling programme

• With both the OES Integrity and OES Teamwork in full operating mode in 2010, OES officially became the dominant drilling rig contractor in the Niger Delta swamps

• OES Passion was successfully awarded a US$19 million 6 month interim contract with SPDC/NNPC JV



Profit and loss


Revenues 17,446 10,455

Revenue Growth 66.9%


Gross Margin 23.9%

EBITDA 5,451 1,222

EBITDA Margin 31.2%

PBT 4,229 1,081

PBT Margin 24.2%

Net Income 2,884 732



Power &Gas

• Completed development of its captive power plant, Akute Power Limited

• Continued to focus on expanding its Greater Lagos Franchise

• Secured new Independent Power Plant (IPP) mandates in Lagos State

• Awarded the development of natural gas distribution infrastructure in Rivers state under Build Own & Operate model



Profit and loss


Revenues 309,333 265,739

Revenue Growth 16.4%


Gross Margin 2.7%

EBITDA 6,008 8,405

EBITDA Margin 1.9%

PBT 5,820 5,790

PBT Margin 1.9%




Supply &Trading

• Successful introduction and implementation of the Sovereign Debt Note (SDN) by PPPRA

• By Q4 the company was acknowledged by PPPRA as the largest volume, independent importer of PMS into Nigeria.

• Interest rates were lower for the company compared to 2009 resulting in higher savings and increased profitability.

• Stability in the Niger Delta contributed to stable oil prices.



Profit and loss


Revenues 175,645 162,515

Revenue Growth 8.1%


Gross Margin 11.4%

EBITDA 7,652 8,102

EBITDA Margin 4.4%

PBT 5,808 4,963

PBT Margin 3.3%




OandoMarketing

• Improved operational efficiency, effective monitoring and strong internal controls

• The introduction of the Sovereign Debt Notes and arrears payment to suppliers in the industry helped to ease the product availability challenge in the second quarter of the year

• The third quarter of the year was characterized by the reintroduction of credit sales as liquidity crises experienced in the first two quarters of the year eased off



Transformation from a downstream giant to a full value chain indigenous champion across West Africa

Company overviewC

urr

en

t

• Fully contract Rig fleet to International Oil Companies

• Enhance Production from producing Assets and accelerate near term development opportunities

• Complete ongoing Gas pipeline projects

• Enhance operations and sign new customers

• Commence construction of 2 new franchise areas

• Intensify white product supply by leveraging efficiencies

• Intensify new product offerings

• Increase distribution efficiency and expansion into high margin volumes, Lubes & LPG distribution

Upstream Division Midstream Division Downstream Division


EnergyServices

Gas &Power

Supply &Trading

MarketingRefining &Terminals

• Development of the Marina Jetty and subsea pipelines in the Lagos Port

Mid

Te

rm

• Leverage local content policy opportunities

• Expand product offering (MWD, etc)

• Harness preferential resource access to dormant acreage due to indigenous status

• Expand gas distribution network in Nigeria, 2 new franchises.

• Commence construction of 1st CPF

• Substantially increase crude oil market share

• Increase white products market dominance by leveraging new import infrastructure.

• Divestment of up to 49% and listing on the NSE

• Development of a 210,000MT terminal facility in Lekki Free Trade Zone

Lo

ng

Te

rm

• Consolidation of position as market leader and expansion into other countries

• Target 100kbopd and 300mmbbls (2P) reserves by 2015 targeted through a mixture of organic growth and acquisitions

• Commence construction of 2nd

CPF and 3 more gas pipeline franchise areas in West Africa

• Increase geographical presence

• Expansion of business across the sub-Saharan region

• Commence FEED and reach F.I.D for refinery


www.oandoplc.com

Q & A

Oando Plc · The information presented herein is based on sources which Oando Plc (“Oando”)regards dependable. This presentation may contain forward looking statements. These

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