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Oando

Q1, 2012 Interim Update

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Contents

I

Q1, 2012, Operational Update

II Details of Press Release

III Q2, 2012, Profit & Loss Forecast Highlights

IV Profit & Loss Forecast Highlights

V Strategic Overview

VI Appendix

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Q1, 2012 Operational Update

Exploration & Production

Energy Services

Gas & Power

Supply & Trading

Marketing

Q1

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Third rig, Passion, has commenced operations for Shell

Fourth rig, Respect, has arrived in the United States to commence refurbishment

Teamwork and Integrity have continued to generate revenue.

Production volumes have remained at c5,000bopd

Preparations remain on track to commence production on OML 90 by Q3 2012

We maintain our target of increasing production in OML 56 by Q3 2012.

EHGC: commenced supply of gas to anchor customer, UNICEM. On course to contract excess capacity by Q2, 2012 and sell by Q4, 2012.

Gaslink pipeline and Akute Power continue to generate revenue for the Group.

Repositioning and upgrade of storage and distribution facilities

LPG strategy on track with delivery of 200k cylinders.

OST has maintained its position as the largest indigenous supply and trading player in the sub-Saharan region

OST currently has a 12% market share in private PMS importation.

Upstream Division Midstream Division Downstream Division

• Third rig, OES Passion, has now been deployed and is ready for operations (Budgeted Revenue – N5.4 Billion).

• EHGC has commenced the supply of gas to its anchor customer, UNICEM, with other opportunities also being explored (Budgeted Revenue - N5.0 Billion).

Guaranteed Revenue Drivers for FYE 2012

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Details of Press Release

Following the preliminary review of the Group’s Full Year accounts for the year ended 31st December, 2011, the Company expects to announce a reduction in is budgeted profit forecast for the year.

This notice is driven principally by one off write-offs against earnings, including impairments of assets, project expenses from capital raising exercises, acquisitions, and termination of technical and managerial charges as highlighted below:

Impairment of Assets N854 Million

Termination charges of TSA/MSA N5.25 Billion

Project Expenses N3.52 Billion

Management does not anticipate further similar exceptional items in FYE 2012 and following these actions, affirms that the Group's balance sheet and capital are in a robust position, providing a solid foundation for the Group's future growth path.

Turnover and Operating Profit for the year are in line with expectations, but Profit after Tax will be affected due to the provisions stated above.

The Group remains focused and dedicated on delivering on its promise to shareholders on value creation and looks forward to an improved earnings position for the FY 2012 with the addition of the earnings from newly commissioned assets.

Furthermore, the Group anticipates a robust performance for the FY 2012, with an indicative profit before tax of N3.6billion for Q2, 2012, which will be achieved, barring any unforeseen circumstances.

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Q2 P&L Forecast Highlights

Q2 2012 Forecast NGN’ Millions

Turnover 191,354

Gross Margin 20,909

Non-interest Expenses (9,850)

Other Operating Income 559

EBITDA 11,656

Interest Expenses (3,995)

Depreciation and Amortization (2,284)

Profit before Tax (PBT) 5,340

Profit after Tax (PAT)/Net Profit 3,612

Net Profit Margin 1.89%

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Profit & Loss Forecast Breakdown

Increase in revenue is expected from the following:

• Commencement of operations of EHGC (Budgeted Revenue – N1.3 Billion)

• Revenue anticipated from third rig, OES passion (Budgeted Revenue N2.0 Billion)

• High Oil prices anticipated (Q2 average of $110/barrel)

• Increased Import volumes expected

OES Passion to be depreciated:

• Budgeted Amount: N181.6 Million

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Interest charges on OES Passion are no longer capitalized, now expensed:

• Budgeted Amount: N703.4 Million

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Higher operating expenses due to:

• Deployment of 3rd Rig (OES Passion): N984.5 Million.

• EHGC: N71.0 Million Op

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Q2 2012 Major Assumptions

1 Exchange Rate NGN/USD - Interbank 160

2 Annual Consumer Inflation Rate (Y/Y%) 11.1%

3 Average borrowing rate 17.5%

4 Average selling price per barrel of crude $110/barrel

5 Average selling price per scm of natural gas N31.15/scm ($5.66/mscf)

6 Average selling price per litre of PMS N97/litre ($0.61/litre)

7 Average selling price per litre of AGO N153/litre (0.96/litre)

8 Average operating day rate for swamp rigs $101,401/day

9 Average efficiency rate for swamp rigs 95%

10 Tax Rate - Company Income Tax 30%

11 Tax Rate - Education Tax 2%

12 Tax Rate - Petroleum Profit Tax 50% (Marginal Fields) - 85%

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Strategic Overview

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

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•Fully contract Rig fleet to International Oil Companies

•Fully refurbish and deploy 4th rig into operation.

• Intensify white product supply by leveraging new infrastructure

• Intensify new product offerings

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

Exploration & Production

Energy Services

Gas & Power

Supply & Trading

Marketing Terminals

•Commence construction of the Marina Jetty and subsea pipelines in the Lagos Port

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• Leverage local content policy opportunities

• Expand product offering (MWD, etc)

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

• Production 20-50kbopd

• Reserves 2P: 100 – 150 mmbbls

• Commence construction of:

• EIIJ pipeline franchise

• OBOB

• Substantially increase crude oil market share

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

• Secure 40% market share in sales, storage and distribution of LPG

• Secure leadership position in all product offerings

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

Lo

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position as market leader and expansion into other countries

• Production 50-100kbopd

• Reserves 2P: 300mmbbls

Through a mixture of organic growth and acquisitions

• Commence construction of 1st CPF and 2 more gas pipeline franchise areas in Nigeria

• Increase geographical presence

•Maintain leadership in all product lines

•Expand white product storage facilities in Nigeria

Upstream Division Midstream Division Downstream Division

• Enhance Production from:

• Assets (5kbopd to 10kbopd)

• Accelerate near term and acquisition opportunities (50mmbbls 2P)

• Complete construction of :

• GL4

• CNG

• CHGC

• Sell 90% of current franchise capacity

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Oando Supply & Trading Appendix

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Downstream Industry

Industry Overview

January 1, 2012: Subsidy on PMS was removed by the Federal Government resulting in the pump price increasing from N65/liter to N141/liter.

Subsidy: 54% of the landed price of PMS.

Negotiations with NLC and TUC carried on for a two week period, with the Nation being brought to a stand-still during that time frame.

January 16, 2012: Subsidy is partially re-instated with the pump price reverting to N97/liter.

Subsidy: 31% of the landed price of PMS.

3 Month window for current subsidy platform

The Federal Government plans to completely remove subsidies in April.

Industry Update

Sources: (a) NNPC – conservative consumption in line with Cote d’Ivoire and potential consumption in line with Senegal, Gabon; (b) World Bank (2008)

Nigeria is the largest consumer of refined petroleum products in Africa

Securitized subsidy payments under a regulated market structure

Working capital efficiencies due to correction of delayed subsidy payments

In a potential deregulated market, NNPC market share can be taken over by strong private players

NNPC’s market share of PMS supply is currently 55%

Opportunity for substantial supply volume increases in all white products

Refining capacity in the West African region is limited, creating ample opportunity for increasing supply into countries in this region

This will follow through on our existing footprints in Benin, Togo, Ghana, Cote D’Ivoire, Burkina Faso and Mali

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Midstream Industry

Industry Overview

Power Sector Road Map: The power sector roadmap was unveiled in August 2010.

6 power generation and 11 distribution companies of the PHCN are to be privatized through the sale of 51% equity.

The Multi Year Tariff Order (MYTO) has been reviewed and the new electricity tariff structure to be announced shortly.

NIPP: Numerous stations with immediate 5,000 MW add on to current National capacity. No gas supply.

$1MM/MW (Turbine Capacity)

The Nigerian Electricity Regulatory Commission (NERC) recently unveiled new rules allowing State/Local governments to generate and distribute electricity in that areas.

Gas Infrastructure: Gas infrastructure contracts have been awarded by the FGN to the private sector.

The Nigerian Gas Master plan aims to grow the Nigerian economy with gas by pursuing three strategic objectives:

Stimulate the multiplier effect of gas in the domestic economy

Position Nigeria competitively in high value export markets

Guarantee the long term energy security of Nigeria

Industry Update

Nigeria intends to ramp up domestic power production

Since 2007, PHCN embarked on a robust new build programme under the National Integrated Power Plan (NIPP), aimed at adding at least 10,000 MW to the national grid. Current power generation is 3,600MW.

An estimated $15 Bn in private sector investment would be needed to meet all Gas & Power development goals

Gas will remain the dominant source of electricity, however efforts are underway to explore the country’s other energy sources

Target is to produce at least 3,000 MW from renewable sources including solar, wind and biogas by 2020

Potential for coal-fired power stations is being explored in the Kogi, Enugu and Benue areas

Nigeria’s current electricity consumption is estimated at 137KWh/capita in comparison to:

Egypt: 1,319KWh/capita

SA: 4,385KWH/capita

Source: IEA Key World Energy Statistics 2009; Business Monitor International – Nigeria Oil and Gas Report Q1 2010

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Upstream Industry

Industry Reform

Oil Reserves: 36bnboe

(10th largest in the world); 2nd in Africa)

Gas Reserves: 187 Tcf

(8th largest in the world; 1st in Africa)

Current daily production of 2.18mmbpd

(Largest producer in Africa).

The IOCs operate 87% of Nigeria’s production

60% of Nigeria’s production is via JV’s between IOCs

and the National Oil Company.

The IOCs have a clear financial & technological

advantage over the local Independents and control

infrastructure.

Changed by the emergence of NOC’s, improved

service companies, legislation and indigenization.

Industry Overview

Petroleum Industry Bill (PIB). The Nigerian Government has tabled the PIB with the following objectives:

Reform the Oil & Gas sector and regulatory bodies

Turn NNPC into an autonomous, self-funding commercial oil company

Incorporate the main JV operations into limited liability companies to

Solve funding issues

Facilitate partnerships between Nigerian companies and foreign players

Consolidate the various tax laws into one Act

Local Nigerian Content

Encourages IOCs to partner with local players in exchange for benefits and concessions

Provides local companies with tax incentives

As the leading Nigerian integrated player, Oando has potential to benefit as IOCs seek out local partners under the new regime

Oando’s experience and existing presence in the Niger Delta means it may be viewed as a partner of choice

Opening of Nigeria to further international credit markets will impact Oando and peers

There are positive signs that the PIB will be passed this year.

Source: BP Statistical Review, Company Estimates, Wood Mackenzie

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