The business expansion plan of Oando Plc which led to its acquisition of Nigerian Agip Oil Company with about N1.25 trillion ($783m), is a clear indication that the Nigerian indigenous oil firm is ready to play on the big stage.
Background
Oando Plc is one of Africa’s leading energy solutions providers with a proud heritage. It has a primary listing on the Nigerian Stock Exchange and a secondary listing on the Johannesburg Stock Exchange. The Group comprises two companies: Oando Energy Resources and Oando Trading. The company boasts of a 43,000 boepd production capacity with a crude export value of 57 million barrels to date.
Board/management
The board of directors of the company comprises 11 members who are all Nigerians. The management team is headed by Wale Tinubu.
Wale Tinubu is the Group Chief Executive. He holds a Bachelor of Law Degree (LLB) from the University of Liverpool, England, an MBA and a Master of Law degree (LLM) from the London School of Economics, England.
He began his career in 1992 as an Attorney, specializing in corporate law. Wale Tinubu has a proven track record in building successful businesses across the energy value chain.
In 1993, he co-founded Ocean and Oil Group, one of the first indigenous trading companies with extensive operations exporting Nigerian petroleum products. In 2000, during the Nigerian Government’s privatization exercise, Wale Tinubu led Ocean and Oil’s successful bid for a stake in Unipetrol. Two years later, he led the largest-ever acquisition of a quoted Nigerian company, with Unipetrol PLC’s purchase of Agip Nigeria PLC. The group was rebranded to Oando PLC in 2003.
Agip’s acquisition
Oando PLC Completes $783 million Acquisition of Eni’s Subsidiary, Nigerian Agip Oil Company (NAOC). Lagos, Nigeria – Oando PLC (“Oando” or the “Company”), Nigeria’s leading energy solutions provider listed on both the Nigerian Exchange Limited and Johannesburg Stock Exchange is pleased to announce the successful completion of the acquisition of 100% of the shareholding interest in the Nigerian Agip Oil Company (NAOC) from the Italian energy company, Eni, for a total consideration of US$783 million comprised of consideration for the asset and reimbursement (the “Transaction”). This acquisition is a significant milestone in Oando’s long-term strategy to expand its upstream operations and strengthen its position in the Nigerian oil and gas sector.
Government’s consent
Preceding the consummation of the deal, Italian oil firm Eni announced that it received formal consent from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), for the sale of 100 percent of the shares of Nigerian Agip Oil Company (“NAOC”) (“Acquisition”). Following Eni’s receipt of consent, both parties proceeded with the completion of the transaction.
“Looking to the future, we will continue to pursue strategic diversification opportunities within the broader energy sector that provide enhanced growth and value creation for our stakeholders, particularly in the clean energy, agri-feedstock sector, as well as energy infrastructure and mining”
Wale Tinubu, the Group Chief Executive of Oando Plc, stated, “We are delighted that Eni has received the government’s approval to proceed with the completion of this strategic transaction. We extend our gratitude to the Honourable Minister of Petroleum Resources and the Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) for their concerted efforts in ensuring the execution of the grant of consent under the novel and robust divestment framework established by the recently enacted Petroleum Industry Act.”
Transaction highlights
• The Transaction increases Oando’s current participating interests in OMLs 60, 61, 62, and 63 from 20% to 40 percent.
• It increases Oando’s ownership stake in all NEPL/NAOC/OOL Joint Venture assets and infrastructure which include forty discovered oil and gas fields, of which twenty-four are currently producing, approximately forty identified prospects and leads, twelve production stations, approximately 1,490 km of pipelines, three gas processing plants, the Brass River Oil Terminal, the Kwale- Okpai phases 1 & 2 power plants (with a total nameplate capacity of 960MW), and associated infrastructure.
• Based on 2022 reserves estimates, Oando’s total reserves stand at 505.6MMboe and the transaction will deliver a 98 percent increase of 493.6MMboe, bringing the total reserves to 1.0Bnboe.
• The transaction is immediately cash-generative and will contribute significantly to the cash flows of the Company.
Chief Executive’s comment
Commenting on the acquisition deal, Wale Tinubu said, “Today’s announcement is the culmination of ten years of toil, resilience, and an unwavering belief in the realisation of our ambition since the 2014 entry into the Joint Venture via the acquisition of Conoco-Philips Nigerian Portfolio. It is a win for Oando, and every indigenous energy player, as we take our destiny in our hands, and play a pivotal role in this next phase of the nation’s upstream evolution. With our assumption of the role of operator, our immediate focus is on optimizing the assets’ immense potential, advancing production and contributing to our strategic objectives. This we will do while prioritizing responsible practices and sustainable development in ensuring a balanced approach to our host communities, and environmental stewardship as we complement the nation’s plan to boost production output. Looking to the future, we will continue to pursue strategic diversification opportunities within the broader energy sector that provide enhanced growth and value creation for our stakeholders, particularly in the clean energy, agri-feedstock sector, as well as energy infrastructure and mining.”
Oando denies deal with Malta
Before the NAOC deal was consummated there was an allegation that Oando Plc was involved in an oil refinery deal in Malta. This the company refuted with a statement issued on the NGX.
The statement read, “Our attention has been drawn to recent allegations on social and digital media, levelled against Oando PLC (‘Oando’ or ‘the Company’) of being a shareholder, and its Principals of being Board members, in a Maltese company, Ras Hanzir Oil Terminal Limited that operates an oil storage and blending facility, and is purportedly responsible for importing adulterated petroleum products into Nigeria. Considering the above, we wish to refute such claims and attest that neither Oando PLC nor its Executives have ever held shares, investments, or interests in the said Maltese company. As part of a comprehensive investigation into the basis of the false claims, we conducted a search of the Malta Business Registry, the official repository for all registered entities past and current within the country. Our search yielded no results for a company bearing that name. Subsequent due diligence efforts similarly failed to uncover any record of the company’s existence. We believe that the false claims are of the malicious intent of misleading the public and our stakeholders. We want to reiterate that as a publicly listed company, any corporate actions, such as acquisitions, are declared publicly in accordance with applicable corporate governance Laws and Rules. Furthermore, it is imperative that information released about a publicly quoted company such as Oando, is thoroughly researched and deemed accurate before it is published in the public domain. The company’s securities are traded daily across two exchanges (NGX and JSE). To prevent misinformation and confusion among investors, as well as our other stakeholders, we implore all members of the Press to take adequate steps to ensure the veracity of reports by fielding all enquiries with Oando PLC Corporate Communications department.”
Financials
Oando announced a profit after tax of N74.7 billion for 2023, reflecting a turnaround from the previous year’s loss.
The company said that the profit showed a positive turn in its fortunes in comparison to the preceding year when the company posted a loss after tax. Within the larger industry context, Oando’s N74.7 billion PAT compared favourably with indigenous peers over the same period under review such as Seplat Energy which recorded N81.330 billion. Similarly, Total Energies Nigeria posted a PAT of N12.912 billion, while Aradel’s PAT stood at N54.2 billion.
Despite what continues to be a challenging business environment and economic headwinds, energy companies like Oando and Seplat amongst others, recorded commendable results.
Green flags
1. Business expansion through the acquisition of Agip
2. Improving financial output
Red flag
1. Competition from Dangote Refinery.
