Oando Plc has reported a significant turnaround in its financial performance for the full year ending in 2023, achieving a Profit After Tax (PAT) of N60.3 billion, compared to a loss of N81.23 billion in the previous year. This positive outcome is accompanied by a 43 percent increase in revenue, which reached N2.9 trillion, up from N1.9 trillion in 2022.
Mr. Wale Tinubu, the Group Chief Executive of Oando, highlighted that the company experienced a remarkable 961 percent rise in operating profits, despite a 24 percent decline in the realised oil price, which averaged 83.15 dollars per barrel in 2023, down from 109.55 dollars per barrel in 2022. He noted similar trends in the gas sector, where prices fell from 14.74 dollars per barrel to 12.19 dollars per barrel.
Additionally, the energy company reported a decrease in Natural Gas Liquid (NGL) prices, which dropped from 6.23 dollars per barrel of oil equivalent (boe) in 2022 to 4.87 dollars per boe in 2023. Tinubu also pointed out that Oando reduced its upstream borrowings by 23 percent, declining from 635.6 million dollars in 2022 to 488.9 million dollars in 2023.
Despite facing operational challenges, including security breaches and pipeline vandalism in the Niger Delta, Oando achieved a profit after tax of N60 billion. This success can be attributed to the company’s strong global trading partnerships, a 12 percent increase in total production, and favorable exchange rate gains from its foreign currency-denominated assets.
The recently completed acquisition of NAOC Ltd. is seen as a critical milestone for Oando, enhancing its reserves and infrastructure. Following a similar acquisition of ConocoPhillips’s Nigerian unit in 2014, this transaction represents a significant step in the company’s long-term strategy to increase its reserves and production capacity.
Looking ahead, Oando aims to integrate its new assets seamlessly and execute strategies that will further enhance production levels. Tinubu expressed confidence in the opportunities that lie ahead and reiterated the company’s commitment to creating sustainable value for all stakeholders.
Despite ongoing security issues in the Niger Delta, Oando reported a 12 percent increase in total production, reaching 23,258 barrels of oil equivalent per day (boepd) in 2023, up from 20,703 boepd in 2022. The company averaged a daily production of 6,211 barrels of oil per day, a 26 percent increase from 4,939 barrels per day in the previous year. Natural gas production also improved, averaging 16,808 boe per day, a 10 percent increase compared to 15,292 boe per day in 2022.
The rise in operating profits was primarily driven by increased revenue and a substantial rise in other operating income, largely due to foreign exchange gains. However, Tinubu noted that administrative expenses have risen, mainly due to exchange losses resulting from the devaluation of the Naira on the company’s foreign currency-denominated liabilities.
With a solid financial performance in 2023, Oando is poised to capitalize on new opportunities within the energy sector, building on the momentum created by its recent acquisition of NAOC for 783 million dollars in August 2024. This acquisition has significantly increased the company’s total reserves to 1.0 billion barrels of oil equivalent from 505.6 million boe, based on 2022 estimates.
As Oando transitions into its new role as an operator, the firm is strategically positioned to leverage its assets for improved returns to shareholders. Following the release of its 2023 audited financial statements, the company anticipates the lifting of its recent share trading suspension, enabling investors to benefit from its record share performance on the Nigerian Stock Exchange, where its share price has surged by 399 percent since the acquisition of NAOC.
