Johannesburg — JSE-listed energy group Oando expected its oil fields Oil Mining Lease 90 and 56 to start production within the next two quarters, the company said yesterday.

The assets are expected to improve Nigeria's oil and gas reserves.

The upstream assets are also expected to eventually boost Oando's financial performance.

Commenting on its results for the quarter ended on September 30, Oando said it had made progress in generating revenue from its upstream assets.

The company also said it was at an advanced stage of concluding the acquisition of controlling interests in Equator Exploration for 21,2m.

Equator Exploration is involved in the exploration and development of oil and gas projects in the Gulf of Guinea.

Oando is building up its oil and gas portfolio in line with its ambition to boost its oil production to 100000 barrels a day by 2013.

In the quarter Oando's turnover fell to 2,3bn from 2,7bn in the corresponding period last year, while gross profit was down from the previous 138,7m to 111m.

But operating profit was up from 73m to 95,6m.

Headline earnings per share were 0,02c per share, compared with 0,05c before.

Oando attributed the decline in revenue to the 26% depreciation of the Nigerian naira against the dollar.

The naira's depreciation also dropped Oando's total assets and liabilities by 8%.

This was despite the company's acquisition of oil rigs and pipelines as part of its investments in the upstream sector.

Oando said the lack of clarity surrounding the government's policies on deregulation of the petroleum sector had negatively affected the company's marketing and supply units.

The downstream market is made up of the refining, supply and distribution network.