Oando completes $783M acquisition of Nigerian Agip Oil
Oando PLC, a leading energy solutions provider listed on the Nigerian Exchange Limited and the Johannesburg Stock Exchange, has announced the completion of a $783 million acquisition of the Nigerian Agip Oil Company (NAOC), a subsidiary of the Italian energy company, Eni. This acquisition marks a significant milestone in Oando’s strategy to expand its upstream operations and solidify its standing within Nigeria’s oil and gas sector.
The acquisition gives Oando a 100% shareholding interest in NAOC, significantly boosting its operational capacity and resource base. Ayotola Jagun, Oando’s Chief Compliance Officer and Company Secretary, confirmed the completion of the deal in a statement on Thursday, August 22, 2024.
In a social media post, Oando shared details of the signing ceremony, which took place at The Peninsula Hotel in London. The company described the event as a pivotal moment in cementing its role as Nigeria’s leading indigenous energy solutions provider. The acquisition is expected to enhance Oando’s long-term growth strategy, with a focus on increasing its footprint in the upstream segment of the oil and gas industry.
With the acquisition of NAOC, Oando’s participating interests in Oil Mining Leases (OMLs) 60, 61, 62, and 63 have risen from 20% to 40%. This expanded stake significantly increases Oando’s ownership in the joint venture assets managed in partnership with the Nigerian Petroleum Development Company (NEPL) and NAOC. The assets under this venture include 40 discovered oil and gas fields, 24 of which are currently in production. Additionally, the venture comprises approximately 40 identified prospects and leads, 12 production stations, and about 1,490 kilometers of pipelines.
Other critical infrastructure includes three gas processing plants, the Brass River Oil Terminal, and the Kwale/Okpai power plants (phases 1 & 2) with a combined capacity of 960 megawatts. These assets are expected to be immediately cash-generative, contributing substantially to Oando’s cash flow and operational growth.
“Based on 2022 reserves estimates, Oando’s total reserves stand at 505.6 million barrels of oil equivalent (MMboe). The acquisition of NAOC is projected to deliver a 98% increase, adding 493.6 MMboe, thereby bringing the company’s total reserves to approximately 1 billion barrels of oil equivalent (Bnboe),” Oando stated.
Wale Tinubu, Group Chief Executive Officer of Oando PLC, expressed his enthusiasm over the acquisition, describing it as the culmination of a decade-long effort marked by resilience and strategic vision. “This announcement is the culmination of ten years of toil, resilience, and an unwavering belief in the realization of our ambition since our 2014 entry into the Joint Venture via the acquisition of ConocoPhillips’ Nigerian portfolio,” Tinubu said.
He emphasized the acquisition as a win not just for Oando, but for all indigenous energy players in Nigeria. Tinubu highlighted the company’s intention to optimize the newly acquired assets’ potential, enhance production, and align operations with strategic objectives. He underscored the importance of adopting responsible practices and promoting sustainable development, particularly in terms of community engagement and environmental stewardship.
“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, ensuring a balanced approach to our host communities, and environmental stewardship as we complement the nation’s plan to boost production output,” Tinubu added.
Oando aims to diversify its portfolio within the broader energy sector, particularly in clean energy, agri-feedstock, energy infrastructure, and mining. The acquisition of NAOC is seen as a step towards realizing these diversification goals while continuing to enhance growth and value creation for stakeholders.
The acquisition aligns with Nigeria’s broader economic strategies, especially in enhancing indigenous participation in the oil and gas sector. With Oando assuming the role of operator in the joint venture, the company is positioned to lead the next phase of growth and evolution in Nigeria’s upstream oil industry.
The completion of this deal has significant implications for the Nigerian oil and gas sector, as it reinforces the growing trend of increased local ownership and management of oil assets. The transaction also underscores the critical role indigenous companies play in sustaining the nation’s energy sector amid global shifts towards local content policies and sustainable development.
Oando’s acquisition of NAOC could also stimulate competition in Nigeria’s oil and gas industry, encouraging other local players to explore similar expansion strategies. As Oando consolidates its position in the sector, other indigenous firms may be prompted to seek strategic acquisitions and partnerships to enhance their market positions and operational capacities.
This development comes at a time when the Nigerian oil sector is undergoing significant transformations, particularly with the ongoing implementation of the Petroleum Industry Act (PIA). The Act, which aims to overhaul the regulatory framework governing the oil and gas industry, provides a conducive environment for indigenous firms like Oando to thrive and expand.
Reactions from industry stakeholders and market analysts have been largely positive, with many seeing the acquisition as a bold move that could reshape the dynamics of Nigeria’s oil and gas sector. Some analysts believe that Oando’s increased asset base and enhanced operational capacity could translate to improved financial performance and shareholder value in the long term.
Others have noted the potential challenges that Oando may face, particularly in managing a significantly expanded portfolio of assets and navigating the complexities of operating in a volatile market. However, the company’s robust strategy and experienced management team are seen as critical factors that could mitigate these risks.
The market outlook following the acquisition remains cautiously optimistic, with investors and stakeholders closely watching how Oando leverages its new assets to drive growth and operational efficiency. The company’s commitment to sustainable practices and community engagement is also expected to play a crucial role in shaping its future success and reputation in the industry.
Oando’s $783 million acquisition of NAOC represents a landmark achievement for the company and the broader Nigerian oil and gas sector. By expanding its upstream operations and increasing its asset base, Oando is well-positioned to lead the next phase of growth and development in the industry. As the company focuses on optimizing its new assets and exploring strategic diversification opportunities, it remains committed to responsible practices and sustainable development, ensuring long-term value creation for its stakeholders.
