Oando Emerges Nigeria’s First IOC, Valuation Hits $4bn

With its operations outside the shores of Nigeria, around the Sao Tome and Principe Exclusive Economic Zone (EEZ), Oando Plc has now attained the status of Nigeria’s first indigenous International Oil Company (IOC).

This, no doubt, attests to the enormous hard work put in by the forward-looking team at the company led by its Chief Executive Officer, Mr Wale Tinubu, who decades ago, seized the gauntlet and dived into the oil and gas business in Nigeria.

A leading African exploration and production company, with world-class operations, Oando prides itself as being at the cutting edge of Africa’s upstream sector, with significant investments in a robust portfolio of oil and gas fields, as well as participating interests in onshore and offshore producing assets.

Its asset base covers exploration, development, and production for both oil and gas and holds interests in over 16 licenses for the exploration, development, and production of oil and gas assets located onshore, swamp, and offshore.

It has a Certified Professional Reserves Report (CPR) from D&M, the second largest in the world, which has also been auditing ENI/NAOC, Chevron, Shell  and other oil Majors for decades.

With the CPR indicating Gross Recoverable 2p reserves on original 20 per cent Certificate of Proficiency (CoP) stake and new NAOC 20 per cent stake Net Present Value (NPV), (10 per cent is $2 billion respectively), total value of the company has now hit $4 billion, that is, before deduction of acquisition debt of the newly acquired company plus legacy debt.

When appropriate discounts are applied, including working capital, Actual Net Asset Value (NAV) of company, less all long term debt, equity value is about  $3 billion.

Because of its United States dollar earnings and taking into account inflation differential between US, which is 3 per cent against Nigeria’s over 30 per cent, devaluation is calculated to be 27 per cent this year.

“Year-on-year, this is at least 15 per cent in the best of times.  The Investment will be phenomenal in Naira terms,” a person with the knowledge of the operations of the company stated.

The Nigerian company with two power plants of 500MW, that is, Kwale 1 and 2, comprising three large gas plants, now has dedicated gas line to Eleme Petrochemicals emerging as main supplier there as well as the ownership of a dedicated gas pipeline to LNG.

With over 200 wells in production, nine flow stations and its own export terminal, Brass, Oando has now emerged the first indigenous company to elevate to the status of a major IOC.

Today, Oando is the largest supplier of gas to the Eleme Petrochemicals. The issue of insecurity hobbling its activities, aside, Oando’s peak production was 100,000 barrels a day last year and 1.5 billion scf in the case of gas.

For Oando, it’s not always about the money, but one of the key things comsidered is the impact that the company can have and about the legacy of being able to build a world-class company and opening the door for others.

In a nutshell, Oando has for years, delivered sustainable value to its stakeholders as it continually grows its reserves by harnessing the optimum potential from its existing range of oil and gas resources, while also acquiring near-term producing assets from international oil companies.

Alongside seasoned professionals who join us from a wide range of multinational companies, the company has nurtured talented young individuals through a challenging accelerated training and exposure programme.

In 2023, Oando’s stock delivered an impressive 159 per cent year-to-date gain. This continued into 2024, as the share price increased by 14 per cent in Q1.

The release of the company’s 2023 financial results on May 31, 2024, revealed a significant turnaround with a pre-tax profit of N104.1 billion compared to a pre-tax loss of N61.8 billion in 2022.

This rally strengthened after the company announced that the federal government approved its 100 per cent acquisition of NAOC, pushing the share price to a five-year high of N47.85 and a year-to-date gain of 371.5 per cent; ranking it as the second-best performing stock on the NGX at the time.

Recently commenting on the enviable results, Wale Tinubu, said: “Despite persistent pipeline vandalism across the Niger Delta, which continues to dampen crude production, we achieved a profit after tax of N74.7 billion in 2023.

“ This was largely driven by increased trading volumes from our strategic global partnerships and net foreign exchange gains on the group’s foreign currency-denominated assets, contrasting with losses on our foreign currency-denominated liabilities.”

Now set to be a clear leader in Nigeria’s oil and gas industry, the acquisition of NAOC is seen as transformative decision and a game-changer for Oando, with its capacity to potentially boost its production.

Wale Tinubu has also assured of the company’s focus on optimising these new assets, advancing production, and pursuing strategic diversification in areas such as clean energy and energy infrastructure. Clearly, this time, it seems  there’s no stopping Oando.

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