IF you were an investor in 2021 or 2022, you would probably not stand the mention of Mr Wale Tinubu-led Oando Plc. It wasn’t going to be your fault because data would support your decision.
The oil and gas company lost N81.231 billion in the full-year 2022 and N74.723 billion in 2023. Economy Post reported that the company incurred losses totalling N155.95 billion in both 2022 and 2023. For both years, the oil and gas company did not have sufficient assets to take care of its liabilities. Economy Post reported that the company was technically bankrupt in 2021 as total comprehensive loss stood at N28.1 billion.
High cost of sales let the oil and gas company down in both years. While Tinubu-led Oando’s revenues from contracts jumped 71 percent from 2022 to 2023, cost of sales rose faster, increasing by 74 percent over the period. Cost of sales increased from N1.915 trillion to N3.326 trillion over the one-year period, which was quite significant.
Its finance income rose by only 5.48 percent to N16.637 billion in 2023 from N15.772 billion reported in the previous year. Finance income refers to “revenue generated by the temporary surplus cash invested in short-term investments and marketable securities,” according to a corporate finance platform named Vernimmen.com. This includes surplus cash from investments in treasury bills, government bonds, commercial papers, among others.
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In 2022, Oando’s total assets as a group stood at N1.252 trillion, with total liabilities estimated at N1.449 trillion. When liabilities exceed assets, the firm is said to be technically bankrupt or insolvent.
Tinubu-led Oando Plc’s debt ratio in 2022 stood at 1.2, meaning that its assets were financed more by debt than equity. In simple terms, Oando relied more on borrowing than on equity from investors in 2022. It is not a good sign, according to financial experts. When a debt ratio is less than 1, the company is financed more by investors’ equity than borrowed funds (debt). However, the firm is funded more with debt than equity if the debt ratio is above 1, say financial experts.
SEC suspension
In 2017, two Oando Plc’s shareholders petitioned the Securities and Exchange Commission (SEC) of mismanagement and infractions, leading to the suspension of the oil firm’s annual general meeting (AGM) in 2019. The company moved to court to challenge the suspension.
In April 2021, SEC said that its action against Oando Plc was due to the company’s “severe breaches of capital market regulations,” noting that some of the breaches were criminal in nature.
Due to conflicting judgments in several courts, SEC said in April 2021 that “parties and relevant stakeholders are enjoined to maintain status quo, which includes the suspension of the Annual General Meeting, pending the determination of the cases and the appeals.” The situation crippled the company, hurting its capacity to operate smoothly. The company did not release its 2022 financial report until March 2024.
Sudden change of fortunes
Oando turned the corner when President Bola Tinubu, an uncle to Mr Wale Tinubu, managing director of the oil firm, came to power in 2023. President Tinubu did two things that helped Oando. One, President Tinubu’s government approved Eni’s proposal to sell Agip to Oando.
“Eni has received formal consent from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) for the sale of NAOC Ltd to Oando Plc,” the oil firm said in a statement in July 2024.
While Oando’s deal, owned by the president nephew, Mr Wale Tinubu, was speedily approved, important deals such as the ExxonMobil-Seplat divestment and Renaissance’s acqusition of Shell’s assets were stalled. By implication, the NUPRC approved Oando Plc’s acquisition of Eni’s 100 percent stake in the NAOC Ltd within 18 months while ignoring the Exxon-Mobil deal for over two years.
This is the real deal. The firm’s oil production grew by 40 percent after it acquired the Nigerian Agip Oil Company. Oando, in a statement announcing its unaudited report for the nine months ended September 30, 2024, noted that it increased production from 22,000 barrels of oil equivalent per day (boed) to 30,675 boed after the NAOC deal was ratifi
The deal was meant to raise investors’ interest in Oando. And that immediately happened. There were speculations around how Oando suddenly mustered the confidence in meeting the $783 million war chest needed for the deal, linking it to the backing of President Tinubu, but Economy Post could not confirm the rumour.
The second step President Tinubu took to help his nephew’s business was to approve petrol subsidy removal. Though this was a good economic policy that was meant to reduce government spending and corruption, insiders in the oil sector attributed the speedy decision to President Tinubu’s “eagerness to protect his interests.” President Tinubu announced the subsidy removal on the day of his inauguration on May 29, 2023.
“After the Eni deal and the subsidy removal, Oando became an investors’ darling and a good pick,” said a major oil sector player, who has an interest in one of the three deals mentioned in this story.
An oil sector insider said, “This explains why we all want to have our person as president. Once subsidy was removed, Oando and other firms had to trade in a typical market. They would buy and sell to customers without waiting for government subsidies which would not come at times. So, it is a beneficial policy that favoured oil firms and the nation.”
Oando turned a corner. Its revenue jumped 45 percent to N4. 1 trillion in 2024 compared to N2. 9 trillion in FY 2023.
Oando now a big ‘buy’
If you are considering buying stocks in Nigeria, Oando should be one of them, according to financial analysts. In 2024, Oando was the best stock in Nigeria, returning 529 percent to investors. This means that if you invested N10 million in Oando stock by the start of 2024, you would gain at least N5.29 million by December 2024.
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Oando closed at N52 on Friday, but had earlier reached N70 by February 10, 2025. Simply Wall Street analysts said, “OANDO is good value based on its Price-To-Earnings Ratio (10.7x) compared to the peer average (12.7x).”
