Equity Research Report: Oando Plc - NIGERIA Oando February Plc –Its is Your Rights: 2009 Take it or Trade it This publication is produced by FSDH Securities Limited (FSDH Sec) a subsidiary of First Securities Discount House Limited (FSDH) solely for the information of users who are expected to make their own investment decisions without undue reliance on any information or FSDH Equity opinions contained herein. The opinions contained in the report should not be interpreted as an offer to sell, or a solicitation of any Research offer to buy any investment. FSDH Sec may invest substantially in securities of companies using information contained herein and may also perform or seek to perform investment services for companies Report- mentioned herein. Whilst every care has been taken in preparing this document, no responsibility or liability is accepted by any member of Rights Issue FSDH for actions taken as a result of Information provided in this publication. FSDH Research Page 1 Equity Research Report: Oando Plc - NIGERIA Executive Summary and privately-owned oil trading company. Currently , Oando imports a 1.0 significant portion of Nigeria’s petroleum product requirements. 1.1 History Oando Plc commenced business operations in 1956 as petroleum marketing company in Nigeria under the name “’ESSO” West Africa Oando Supply & Trading also maintains presence in the world’s products incorporated”’, a subsidiary of Exxon Corporation of the USA. On August 25, freight market in terms of vessels chartered on spot and time basis for the 1969, the company was incorporated under Nigerian Law as Esso Standard delivery of oil and oil products to various customers globally. With a track Nigeria limited. In 1976, the Nigerian government bought Esso’s interest record of 100% delivery on all its supply contracts, consolidating its existing and became 100% owner of the company. The company was then markets, Oando Supply and Trading has positioned itself as the supplier of choice for products supplies in the West African sub region. rebranded as Unipetrol Nigeria Ltd. On March 01, 1991, the company became a public limited company – 1.2.3 Gas & Power: The Company is building the largest gas pipeline Unipetrol Nigeria Plc. In the same year, 60% of the company’s shareholding grid in Nigeria. It pioneered the private sector piping and distribution of was sold to the Nigerian Public under the first phase of the then privatization natural gas to industrial and commercial consumers. With 100km of pipes exercise. Its shares were subsequently quoted on the floors of the Nigerian already laid in Lagos State, and another 124 km in progress in Akwa Ibom, Stock Exchange (NSE) in February 1992. Cross River State, while aggressively seeking other authorization in Nigeria and the West African sub-region, Oando has taken bold steps towards Ocean & Oil Investments limited acquired a 30% stake in Unipetrol from the building sub-African’s largest gas pipeline network. The company’s target is Federal Government of Nigeria in 2000 and became a core investor. In that in the near future, Nigerian citizens and industries will begin to enjoy , August 2002, Unipetrol acquired 60% stake in Agip Nigeria Plc (“Agip) by the benefits of a cheaper, cleaner and safer fuel from it’s integrated gas winning an international bid conducted by Agip Petrol International B.V. The pipeline network. US$86mn acquisition was the largest ever of a Nigerian quoted company. Unipetrol management team subsequently completed the merger and The power business will contribute several captive power plants to the integration of Agip with Unipetrol and the combined entity was re-branded Nigerian market as it positions to be a major player in the Nigerian electricity Oando Plc in December 2003. Oando consolidated its affiliate and industry, whilst it stands ready to actively participate in the proposed power subsidiary companies into an integrated energy group. sector liberalization. Oando was registered as an external company in South Africa on Tuesday, November 1, 2005 and on November 25, 2005, concluded its secondary 1.2.4 Energy Services: Oando is Nigeria’s foremost indigenous oilfield listing on the Johannesburg Stock Exchange (JSE) in South Africa. The services company. It made a bold entry in the oil & gas upstream services company is Africa’s leading integrated energy solutions provider which via Oando Energy Services – an integrated oilfield services company. In comprises a group of companies operating within Nigeria and the African demonstration of its high level of technical capabilities, the company won energy sector. competitive oilfield service contracts in excess of $150mn in Nigeria in 2007. With the aim of being Nigeria’s largest indigenous oilfield services firm and 1.2 Business: The activities of the Group span from Petroleum Products encouraged by the renewed local content drive in Nigeria, it commenced its Marketing, Supply and Trading of Crude Oil & Refined Petroleum Products, $500mn five-year investment plan with the acquisition of two oil drilling rigs Gas & Power, Energy Services, Exploration & Production to Refining. A for approximately $100mn for use in the Niger delta. This company has also brief description of its activities is as follows: recently acquired a third oil rig to boost its drilling services. 1.2.1 Petroleum Products Marketing: Oando is one of the Nigeria’s 1.2.5 Oando Exploration and Production: The company is building leading oil retailers. Its leadership position as Nigeria’s foremost integrated a portfolio of oil & gas properties in Nigeria. The brave steps in the upstream energy company is associated with the successes it has recorded in the sector were boosted with the acquisition of oil & gas oilfields by Oando petroleum products marketing business. As the nation’s leading oil retailer, Exploration and Production Limited during the oil bloc bidding rounds. with one in every five litres of petroleum products being sold or distributed by Oando via its 500 retail outlets and strategically located terminals, it has Oando is the operator of two oil blocks – OPL 278 and OPL 236. The continuously ensured products supply and availability in Nigeria and West company is also a Nigerian Content Partner with AGIP Oil on OPL 282 and African countries. has a 45% interest in a marginal field, OML 56. These fields are in different stages of development and will significantly increase Nigeria’s oil & gas In a bid to improve the overall efficiency of the industry and to lower product reserves. cost for the consumer, it is on the brink to construct the largest products terminal in sub-Saharan Africa in Lekki free zone and an offshore sub- 1.2.6 Oando Refining: With a plan to develop 360,000bpd capacity marine pipeline delivery system in Apapa. Greenfield refinery in Lagos State , the diversified revenues streams drive incremental earnings growth for the group will ensure that performance is 1.2.2 Supply and Trading of Crude Oil & Refined Petroleum not dependent on any one particular business line. With its investments and Products: Oando is Nigeria’s largest independent and privately owned oil diversification into alternative energy sources, the company is fast achieving trading company. In 2004, Oando consolidated its global oil supply and its goal of being the leading integrated energy solutions provider in Nigeria trading businesses to emerge as sub-Saharan Africa’s largest, independent and in West African countries. FSDH Research Page 2 Equity Research Report: Oando Plc - NIGERIA Table 1: Professional Parties Table 4: Activity Table Registrar First Registrars Nigeria Date Activity Responsibility Limited Auditors Price Water House Coopers 25/01/2010 Acceptance List opens Issuing Houses/Registrars Bankers: Access Bank Plc 19/02/2010 Acceptance List closes Issuing Houses/Registrars BNP Paribas Diamond Bank Plc 08/03/2010 Receiving agents make returns Issuing Houses/Receiving Agents Ecobank Nigeria Plc Fidelity Bank Plc 09/03/2010 Lift Technical Suspension on existing shares Stockbrokers on the Nigerian Stock Exchange First Bank of Nigeria Plc First City Monument Bank Plc 29/03/2010 Forward allotment proposal and draft Issuing Houses newspaper announcement to Securities and Exchange Commission (SEC) First Securities Discount House Guaranty Trust Bank Plc 31/03/2010 Receive SEC approval of the allotment Issuing Houses Limited Intercontinental Bank Plc Kakawa Discount House Ltd. 02/04/2010 Return excess/rejected application money Issuing Houses/Registrars Nigerian International Bank Ltd. Oceanic International Bank Plc 16/04/2010 Dispatch share certificates/credit CSCS Registrars accounts Standard Chartered Bank Ltd. Standard Bank, London 19/04/2010 Forward declaration of Compliance to the NSE Issuing and JSE Houses/Stockbrokers Stanbic IBTC Bank Plc Sterling Bank Plc 21/04/2010 Listing of the newly issued shares/Trading Issuing commences Houses/Stockbrokers Union Bank of Nigeria Plc United Bank for Africa Plc 21/04/2010 Submission of summary report to SEC Issuing Houses WEMA Bank Plc Zenith Bank Plc Sources of Information: Annual Report & Accounts, Rights Circular ,Company’s website, CBN, NBS, NNPC, NSE, and FSDH Research. Table 5: Rights Summary Table 2: Subsidiary Information as at December 31, 2008 Authorized Ordinary Share 2,000,000,000 Name of Entity Interest Held (%) 905,084,628 905,084,628 Akute Power Limited 100.00 Rights Issue Rights Issue Apapa SPM Limited 100.00 1 for 3 1 for 3 East Horizon Gas Co. Ltd. 100.00 December 18, 2009 December 18, 2009 Gaslink Nigeria Limited 98.00 N20,437,328,687.35 N20,437,328,687.35 Oando Energy Services Limited 100.00 301,694,876 301,694,876 Oando Exploration & Production Ltd. 100.00 N70.00 N70.00 Oando Gas & Power Limited 100.00 January 25, 2010 January 25, 2010 Oando Lekki Refinery Limited 100.00 February 19, 2010 February 19, 2010 Oando Marketing Limited 100.00 Oando Port Harcourt Refinery Ltd.