By Susan Olalere 
In a year marked by significant fluctuations in the global energy markets, Oando Plc has achieved a remarkable milestone on the Nigerian Exchange Limited (NGX). The company’s share price soared by an incredible 1,286% between September 4, 2023, and September 2, 2024, pushing Oando into the elite N1 trillion market capitalization league for the first time in its history. This meteoric rise has made Oando the 10th most valuable company listed on the NGX, solidifying its status as a key player in Nigeria’s oil and gas sector.
The primary driver behind Oando’s impressive stock performance has been its strategic acquisition of Agip, an Italian energy giant. This acquisition, valued at $783 million, has transformed Oando into the largest indigenous player in Nigeria’s oil and gas sector, with proven reserves now standing at about 1 billion barrels of oil equivalent. The deal also included the transfer of two power plants and nearly 1,500 kilometres of pipelines, significantly enhancing Oando’s operational capabilities.
The market has responded enthusiastically to this acquisition, with Oando’s share price increasing rapidly following the announcement. As Ekene Oyeka, a Securities Dealer with Norrenberger Securities, noted, “Since the announcement was made, their share price has been on full buy, we are rarely seeing any sellers in the market that want to sell Oando.” This surge in investor confidence reflects a broader optimism about Oando’s future prospects in the Nigerian energy market.
Implications for Nigeria’s Stock Market
Oando’s rise is a significant development for the Nigerian stock market, particularly within the energy sector. The company’s entry into the N1 trillion market cap league marks a shift in the competitive landscape, positioning Oando as a formidable rival to other major players like Seplat Energy Plc. This competition could spark further consolidation in the sector, leading to more mergers and acquisitions as companies seek to bolster their market positions.
Moreover, Oando’s success could attract increased attention from both local and international investors. The strong performance of its stock suggests that there are substantial opportunities in the Nigerian energy sector, particularly for companies that can execute strategic acquisitions and manage their operations effectively.
Despite its recent successes, Oando faces significant financial challenges that could impact its long-term sustainability. The company’s negative equity, which stood at N236.3 billion at the end of 2023, and its substantial borrowing of N821.4 billion, are causes for concern. These figures indicate that Oando has struggled with compounded losses over time, and its financial health may not be as robust as its market performance suggests.
Additionally, Oando has yet to release audited financial statements since 2022, adding another layer of uncertainty for investors. As Adebayo Adebanjo, Senior Analyst at CardinalStone Securities, pointed out, “Oando has not dropped audited financials since 2022, and as of their FY 2023 unaudited numbers, they still have legacy issues like their negative equity.” While the fundamentals of the Agip acquisition are strong, these financial challenges could pose risks to Oando’s long-term growth.
Looking ahead, Oando’s future in Nigeria’s oil and gas sector appears promising, but it is not without risks. The company’s ability to leverage its recent acquisitions and navigate its financial challenges will be crucial to sustaining its current momentum. Investors should closely monitor Oando’s upcoming financial reports and market developments to make informed decisions. As Oando continues to expand its operations and solidify its market position, the broader implications for Nigeria’s stock market and the energy sector will be significant.
OpeOluwa Okudero
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