Oando PLC’s Q3 2024 financial results paint a picture of resilience and strategic progress despite significant hurdles.
The company reported a 36% revenue growth to N3.2 trillion, underscoring the impact of its recent restructuring and strategic shifts. However, operational disruptions due to sabotage and theft resulted in a 5% production decline, with average daily output dropping to 20,560 boe/day from 21,529 boe/day in the previous year.
A key highlight was the acquisition of the Nigerian Agip Oil Company (NAOC), which boosted post-acquisition production by 40% to 30,675 boe/day. Group Chief Executive Wale Tinubu described the deal as transformative, aligning with Oando’s strategic pivot to upstream operations and reducing reliance on the volatile downstream sector.
Despite revenue growth, profitability faced pressure. Profit After Tax (PAT) declined by 31% to N76.3 billion, impacted by foreign exchange losses and higher finance costs. Operating profit also fell 23% year-on-year, reflecting increased administrative expenses amid macroeconomic challenges.
The company’s trading segment showed further weakness, with crude oil volumes dropping 47% year-on-year and refined petroleum products declining by 56%. Reduced capital expenditure on oil and gas development, down to $12.7 million from $47.4 million in the same period last year, signals caution but raises concerns about the pace of asset optimization.
Oando’s pivot to upstream operations appears to be a long-term strategy, bolstered by the NAOC acquisition and a focus on efficiency and portfolio expansion. However, the persistent risks of sabotage and theft in the Niger Delta remain critical challenges requiring enhanced security measures and collaboration with stakeholders.
While uncertainties around profitability and operational stability persist, Oando’s strategic initiatives and proactive responses suggest a company positioning itself for sustainable growth in Nigeria’s energy sector.