Oando records N60.3 billion profit after tax in 2023

On Friday, 1 November, 2024, leading energy solutions company Oando Plc reported a profit after tax of N60.3 billion in its audited financials for the full year ended 2023, a substantial improvement from its 2022 financial performance.

Impressively, the company’s financial performance for the year ended 31 December, 2023, was marked by other noteworthy developments. The company recorded a 43% increase in revenue, reaching N2.9 trillion compared to N1.9 trillion in 2022. Notably, Oando achieved a remarkable turnaround, transitioning from a loss in 2022 to a profit-after-tax of N60.3 billion in 2023, a 961% increase in its operating profits despite the 24% reduction in the realised oil price ($83.15/bbl in 2023 compared to $109.55/bbl in 2022).

This reduction was consistent in gas prices as the value fell from $14.74/bbl in 2022 to $12.19/bbl in 2023; and in NGL prices with a similar decline from $6.23/boe in 2022 to $4.87/boe in 2023. Additionally, the company reduced its upstream borrowings by 23%, from US$635.6 million in 2022 to US$488.9 million in 2023.

Commenting on the results, Wale Tinubu, Group Chief Executive, Oando Plc, said: “Despite the operational hurdles occasioned by security breaches and persistent 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% increase in total production, and favourable exchange gains from our foreign currency denominated assets.”

“Our recently completed transformational acquisition of NAOC Ltd is a pivotal moment for the Company due to the expansive reserves and vast infrastructure network. Following our 2014 acquisition of ConocoPhillips’s Nigerian unit, this transaction was the next phase in our long-term strategy to increase our reserves and production capacity by leveraging the exit of the International Oil Companies whilst securing operational control of the assets. Our immediate focus now shifts to a seamless integration and execution of initiatives towards achieving a marked increase in production. We are confident about the opportunities this platform provides and are committed to delivering sustainable value to all stakeholders” he added.

Despite persistent operational security challenges in the Niger Delta, Oando achieved a 12% increase in total production, reaching 23,258 boepd in 2023 compared to 20,703 boepd in 2022. Expanding on the performance of its production portfolio, Oando averaged a daily production of 6,211 bbls/day, making a 26% increase to its 4,939 bbls/day in 2022.

Consistent with the improved performance, it averaged 16,808 boe/day of natural gas, 10% better than 15,292 boe/day of natural gas in 2022. The company cited improved operations and repairs of shut-in wells offset by persistent sabotage activities as a reason for the production increase.

According to Reuters, the decline in global oil prices in 2023 was because of a tumultuous year of trading marked by geopolitical turmoil and concerns about the oil output levels of major global producers.

As stated in the press release published on the company’s website, the operating profits increase was “driven by the increase in revenue and a significant increase in other operating income, largely due to foreign exchange gains on the group’s US dollar-denominated monetary assets. This was despite an increase in administrative expenses primarily from exchange losses from the impact of the Naira devaluation on our foreign currency-denominated liabilities.”

With this solid financial performance, Oando is well-positioned to capitalise on the opportunities presented by the energy sector, building on the momentum generated by its $783 million acquisition of Nigerian Agip Oil Company (NAOC) in August 2024. The acquisition doubled the company’s total reserves to 1.0 billion barrels of oil equivalent (boe) from 505.6 million boe based on 2022 reserves estimates. With its new status as an operator, Oando is better positioned to control its destiny by deploying its acquired assets to deliver even better returns to its shareholders.

READ ALSO: Oando joins global energy contemporaries at African Energy Week 2024

Also, with the release of its 2023 audited financial statements, the company is bringing its reporting obligations to date, and it is expected that its recent shares trading suspension will be lifted, allowing investors to benefit. This, in tandem with its record share performance on the Nigerian Stock Exchange (NGX), with its share price on an upward trajectory, specifically growing by 399% following its acquisition of NAOC, are all signs of a company on an upward swing and one to watch.