In its audited financials for the full year ending 2023, Oando PLC, a prominent provider of energy solutions, declared a profit after tax of N60.3 billion, which represents a significant improvement over its financial performance in 2022.
According to the company’s financial results for the year that concluded on December 31, 2023, which were made public on Friday, sales increased by 43% to N2.9 trillion from N1.9 trillion in 2022.
Despite a 24% drop in the realized oil price, which was $83.15/bbl in 2023 compared to $109.55/bbl in 2022, Oando claimed to have had a spectacular turnaround, going from a loss in 2022 to a profit-after-tax of N60.3 billion in 2023, a 961 percent rise in its operational profits.
The price of gas decreased from $14.74/bbl in 2022 to $12.19/bbl in 2023, and the price of NGL decreased similarly, from $6.23/boe in 2022 to $4.87/boe in 2023.
The business also cut its upstream borrowings from $635.6 million in 2022 to $488.9 million in 2023, a 23% decrease.
“Despite the operational challenges caused by security breaches and ongoing pipeline vandalism in the Niger Delta, we achieved a profit after tax of N60 billion, bolstered by the strength of our global trading alliances, a 12 percent increase in total production, and favorable exchange gains from our foreign currency denominated assets,” said Wale Tinubu, group chief executive of Oando PLC, in response to the results.
“The extensive reserves and extensive infrastructure network of NAOC Ltd., which we recently completed in a transformative acquisition, represent a critical moment for the company.” This deal was the next step in our long-term plan to boost our reserves and production capacity by taking advantage of the International Oil Companies’ departure while maintaining operational control of the assets, which began in 2014 when we acquired ConocoPhillips’ Nigerian division.
In order to achieve a significant increase in production, our immediate focus now switches to the smooth integration and implementation of projects. We are dedicated to providing long-term value to all stakeholders and are optimistic about the prospects this platform offers,” he continued.
Oando increased total output by 12% in 2023, from 20,703 boepd in 2022 to 23,258 boepd in 2023, despite ongoing operational security issues in the Niger Delta.
Building on the success of its production portfolio, Oando increased its production by 26% to 4,939 barrels per day in 2022, averaging 6,211 barrels per day. The increased performance was reflected in the average of 16,808 boe/day of natural gas, which was 10% more than the 15,292 boe/day of natural gas in 2022.
The business explained the increase in production by pointing to better operations and repairs of shut-in wells that were counterbalanced by ongoing sabotage activities.
According to the press release posted on the business’s website, the rise in operating profits was “primarily driven by foreign exchange gains on the group’s US dollar-denominated monetary assets, as well as an increase in revenue and a significant increase in other operating income.”
This was the case even though our foreign currency-denominated liabilities increased in administrative costs, mostly due to exchange losses resulting from the devaluation of the Naira.
Oando’s strong financial results put it in a strong position to take advantage of the opportunities in the energy sector, building on the momentum created by its August 2024 acquisition of Nigerian Agip Oil Company (NAOC) for $783 million.
The acquisition increased the company’s total reserves from 505.6 million barrels of oil equivalent (boe) based on 2022 reserves estimations to 1.0 billion boe. Oando is in a stronger position to take charge of its future by using its newly acquired assets to provide its shareholders with even higher returns now that it is an operator.
Additionally, the company is bringing its reporting responsibilities up to date with the release of its 2023 audited financial statements, and it is anticipated that the recent suspension of share trading will be lifted, benefiting investors.
This, together with its record-breaking share performance on the Nigerian Stock Exchange (NGX) and its rising share price—which increased by 127% after it acquired NAOC—are all indications of a company on an upward swing and one to watch.
