Building a Leading Indigenous Energy Group

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Building a Leading Indigenous Energy Group Wale
Tinubu Group CEO, Oando Plc July
2008 NSE Quoted Company of the Year 2003, 2004
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Outline
The Nigerian Energy Sector
The Oando Group
Conclusion
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Energy Oil is the backbone of the Nigerian
economy

• Nigeria is the largest oil producer in Africa
• 12th largest crude oil exporter in the world
• Estimated average production capacity of 2.5
  million bpd with a Government target of 4 million
  bpd by 2010
• Nigeria has proven oil reserves of over 36
  billion barrels
• Government target of 40 billion by 2010
• Nigeria has the 7th largest natural gas reserves
  in the world
• 182 trillion cubic feet of natural gas reserves

20 of Shells global reserves are in this region
Nigeria is a key member of OPEC. However, it
faces increasing pressures from multinational oil
companies and large oil-consuming countries to
increase its production levels (and possibly
leave OPEC)
Source Energy Information Association as at
January 2007. www.eia.doe.gov
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Energy Industry is poised for more growth

• Up to 65 of global expenditure in the upstream
  industry expected to take place in sub-Saharan
  Africa
• Estimated annual industry budget of 7-10bn with
  likely moderate growth
• 40-50 of this budget will be in the services
  sector
• Examples of oil major spending include
• Chevrons expected investment of 2.5bn in
  Agbami, with estimated reserves of 1 billion
  barrels
• ExxonMobil expects to invest 11bn from 2003 to
  2011 and double production from 570,000 bpd to
  1.2 mbpd

Oil giants, including KPOC, CNOOC, Petrobas,
recently extremely active in the region,
proposing to invest in oil blocks, pipelines,
IPPs and transportation infrastructure.
Global oil and gas trends suggest an even greater
increase in activities in Nigeria / Gulf of
Guinea
Source Energy Information Association as at
January 2007. www.eia.doe.gov
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Energy Creating private sector opportunities,
particularly for local players

• Historical
• Government owns assets from refining to
  distribution
• Fixed prices and margins throughout the energy
  value chain
• JVs between oil majors and Govt. account over 90
  of the countrys production
• Most EP services performed by subsidiaries of
  multinationals or foreign service providers

• Trends
• Most assets being privatised
• Licenses granted for private Refinery,
  Petrochemicals, IPPs, etc.
• Complete price removals
• Fully deregulated Diesel and jet fuel
• Partial deregulation Petrol and kerosene (petrol
  prices increased 200 since 2002)
• Recently allocated oil blocks
• Local Content Policy forcing indigenous
  participation
• 70 local content by 2010
• target 50 of crude processed locally by 2006
  not met

A market that was almost exclusively for the
Government and oil majors is now open to well
structured local players
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Outline
The Nigerian Energy Sector
The Oando Group
Conclusion
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Oandothe future
Gas Power
Exploration Production
Supply Trading
Refinery
Energy services
Marketing
No. 1 marketer of Petroleum Products

• Dominant
• local player
• Expansion
• into other
• West African
• Markets

The dominant player in gas supply powering
Nigeria's manufacturing base
A Significant Opportunity for Oando
Evolving into a leading player in the upstream
Offering ProductService Linesthrough
Strategic alliances (e.g.Baker)
Seeking opportunities to ensure product
availability
exploiting synergies between subsidiaries
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Oando is one of the premier companies in Nigeria

• Winner of the Nigerian Stock Exchange
  Presidential Merit Award for Quoted Company of
  the Year in 2003 and 2004
• Six time Winner of the Nigerian Stock Exchange
  Award for Best Quoted Company in the Downstream
  Sector the latest being 2006
• Largest indigenously owned integrated energy
  company
• Largest retail network in Nigeria with operations
  in Ghana Togo
• One of the largest wholly Nigerian owned
  non-financial institution by market capitalization

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Our Downstream Business
Oando Marketing
Oando Supply Trading
Oando Refinery
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Key Focus Areas Near/Medium Term

• Optimize supply chain logistics in order to
  ensure efficient delivery across the markets we
  serve
• Positioned to benefit from SPM and tank farm
  initiatives of the Group which are expected to
  come on stream from 2010
• Increasing business efficiency by
• Improving gross margin line by increasing
  participation in higher margin product lines
  (e.g. Lubes, LPG)
• Transiting to a publicly quoted company on the
  Nigerian Stock Exchange
• Rigorous control of administrative and operating
  costs
• Improving asset turnover
• Employing synergies across the Group to increase
  terminaling efficiency

Oando is aggressively seeking ways to work its
assets and to invest precious capital in higher
return businesses
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Key Focus Areas Near/Medium Term

• Continue to play a dominant role in bridging the
  existing supply gap of petroleum products into
  Africa
• Opening up new markets across Sub-Saharan Africa
• Investing in products storage, terminalling and
  product distribution infrastructure across
  Sub-Saharan Africa
• Leveraging on Oando Marketings West African
  presence to obtain storage facilities for
  expanding supply and trading

Given its key relationships with strategic
partners and access to financing, Oando is well
positioned to capture trading opportunities
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Key Focus Areas Near/Medium Term

• Completed pre-feasibility studies on the
  establishment of a refinery in green-field
  refinery in the Lekki Export Processing Zone,
  Lagos
• 360,000 bbl/day in 2 phases of 180,000 bbl/day
  each
• Purchased 150 hectares of land for 1st phase of
  Refinery development via a minimum 200,000 metric
  tonne ultra modern tank farm with off-shore SBM
  discharging facility
• Continues to seek opportunities to buy government
  assets to be privatized

The refineries provide a market opportunity of up
to 5bn per year
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Our Mid-Stream Business
Oando Gas Power
Gaslink Nigeria Limited
Akute Power
East Horizon Gas Company
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Key Focus Areas Near/Medium Term

• Recently concluded expansion of the current
  pipeline network from 66km to 99km will add on
  20-25 new large industrial customers, 500
  increase in throughput capacity from 20,000 scm/h
  to 65,000 scm/h.
• Deregulation of gas industry will provide an
  opportunity for Oando to purchase part of the
  unbundled NGC (Marketing, Transmission or
  Distribution Company)
• Unreliable power supply opens opportunity to
  provide dedicated gas and power to captive
  customers including manufacturing facilities and
  gas to new Independent Power Plants
• Concluded plans to build a 120 km pipeline to
  open up the eastern Nigerian market
• Supply of gas to Benin, Ghana and Togo upon
  completion of West African Gas pipeline

Continued deregulation will increase demand for
gas and drive enhance returns on invested capital
SCM/H Standard Cubic Metres per Hour
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Key Focus Areas Near/Medium Term

• Total national demand, 15,000MW, installed
  capacity, 7,500MW, supply 1,500MW
• Opportunistic play to provide captive generation
  to single user/customers where the scale calls
  for it
• Signed a PPA with the Lagos State Water
  Corporation to build 12.15 MW power plant.
  Project will complete early 2009
• Looking into the ongoing privatization of PHCN
  assets to strategically place ourselves as the
  premier power provider in the Nigerian market
• Successor companies
• 1 transmission company
• 11 distribution
• 6 generation

Company is also currently seeking an electricity
distribution concession
PPA Power Purchase Agreement
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Our Upstream Business
Oando Energy Services
Oando Exploration Production
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Key Focus Areas Near/Medium Term

• Contracts worth 269 million in the pipeline over
  the next 3 years (total capital investment in the
  EP sector estimated to be between 7 and 10
  billion)
• Currently has 4 Product Service Line (PSL)
  offerings and is aggressively expanding into the
  Rigs business
• Expected to put 2 swamp rigs into operations by
  Q3 2008 with plans to invest an additional 100 m
  in rigs in 2008
• Positioned to be the local content partner of
  choice for foreign partners (government mandate
  is for 40 local content by 2007 and 70 by 2010)
• Exploring significant expansion opportunities
  into the Gulf of Guinea region
• Commenced 5 year Investment plan of 500m in
  Rigs in 2007

Company estimate based on current contracts signed
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Key Focus Areas Near/Medium Term

• Currently own interest in 4 assets
• OPL 278, OPL 236, OPL 282, OML 56
• P50 reserves 34 million Barrels of Oil
  Equivalent (OPL 236 and OML 56)
• To monetize existing assets by
• Seeking to confirm availability of reserves in
  commercial quantities
• Continuing to seek partnerships, farm-in and
  farm-out arrangements in Nigeria and in the Gulf
  of Guinea as opportunity arises
• Strategically build a portfolio of oil and gas
  assets spanning green-field development to proven
  producing fields
• Preferred bidder for the acquisition of Shells
  49 stake in 2 Deep-Offshore Oil Blocks OML 125
  and OML 135
• Actively seeking opportunities to increase its
  portfolio of assets

Significant growth vehicle in the near to medium
term.
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Over the years there has been tremendous
improvement in performance
5 year PBT trend - m
5 year Revenue trend - m
More Intra-company sales in 2007 compared to
2006
41 CAGR
58 CAGR
121 CAGR in Shareholders funds from 2003 to 2007
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Contribution by Subsidiary in 2007
100 1,501.79m Turnover
100 173.28m Gross Margin
MKT 74
MKTING 54
ST 18
ST 42
GNL 5
GNL 1
OES 3
OES 3
100 75.91m EBITDA
100 49.80m PAT
ST 52
MKT 60
MKT 39
ST 30
GNL 9
GNL 8
OES 2
OES 0
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Energy Oil is the backbone of the Nigerian
economy
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Group Balance Sheet
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Group Consolidated Cash Flow Statement
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Outline
The Nigerian Energy Sector
The Oando Group
Conclusion
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Oando is committed to adhering to the most
stringent corporate governance measures

• Currently compliant with corporate governance
  policies and relevant regulation in Nigeria
• Aligned with Code of Best Practice and South
  Africas King Code II
• Oando is fully compliant as of December 31, 2006
• Financial records are IFRS Compliant
• Financial accounts reviewed by PwC

The Board is constituted of 3 Exec, 6 Non-Exec
and 3 Independent Directors Nominations,
Remuneration and Audit Committees are formed
primarily of Non-Exec and Independent
Directors Oando has always used the leading
financial, legal and audit advisers for all of
its transactions
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Oando has a history of pioneering financial
transactions

• The Unipetrol acquisition by OOH in 2000 was
  Nigerias first truly leveraged privatisation
  buy-out
• Judged to be one of the most successful
  privatisations based on growth in the company and
  shareholder returns
• Oando is currently showcased by the President of
  Nigeria as an example of economic opportunities
  created by his Government
• Unipetrols acquisition and merger with Agip
  Nigeria in 2002 were the largest transactions
  ever on the Nigerian Stock Exchange (NSE) at that
  point in time
• Oandos N16.1bn equity raising in 2004 was the
  largest amount raised by a non-financial
  institution on the NSE

Oandos listing on the JSE was another pioneering
transaction which will provide access to
international capital markets and opportunities
for more strategic partnerships
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Oando is supported by a strong group advisers and
international banks
Oando also has firm support of the seven largest
banks in Nigeria
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Oandos has a dynamic team, with diverse
experiences

• Femi Adeyemo,
• Group CFO
• MIF London, MSc Lagos, CA
• Experience with McKinsey (Associate Principal),
  PwC, FSDH, and Prime Merchant Bank

• Mofe Boyo,
• Deputy Group CEO
• BL London
• 15 years oil and gas experience with Oando, Ocean
  and Oil and FRA Williams

• Wale Tinubu,
• Group CEO
• LLM LSE
• 13 years oil and gas experience with Oando, Ocean
  and Oil Prior experience with KO Tinubu Co. in
  petroleum and corporate law

• Ronke Sokefun,
• Group Legal Adviser
• BL Nigerian Law School
• Associate, Institute of Chartered Secretaries and
  Administrators of Nigeria
• Experience with Ighodalo Associates Limited,
  Messrs Aluko Oyebode where she became a Partner
  in 2001.

• Deji Delano, Group Compliance Officer
• BL Nigerian Law School
• Experience with Chief F.R.A. Williams, George
  Utomi Partners, Akin Delano Legal
  Practitioners, and Stallion Property Dev. Co.

• Bolaji Osunsanya,
• CEO Gas Power
• MS Lagos
• Experience with Arthur Andersen, Access Bank and
  Guaranty Trust Bank

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Oando provides the best opportunity for exposure
to West African oil and gas

• Largest industry in the regional economy
• One of the most important in the global economy
• Significant ongoing reform
• E.g. prospecting licenses, privatisations, local
  content policy
• Extremely attractive growth, margins and returns
• 1 of few Nigerian public companies with revenues
  above 1bn
• Large enough to significantly influence industry
  dynamics
• Only public company with a balanced portfolio of
  attractive assets across the energy value chain
  and a sole focus to dominate West Africa
• Experience and training from globally recognized
  institutions
• Passionate and dedicated to building a
  pan-African institution

Industry Attractiveness
Company Dominance
Committed Management
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Thank youwww.oandoplc.com