Still on Oando’s Audacious Moves to Grow Asset Portfolio
BUSINESS REVIEW
A few days after the announcement of Oando’s planned acquisition of the Nigerian Agip Oil Company (NAOC), there are excitements that Oando’s audacious move to bridge the gap created by the wave of divestments by some international oil companies will spur other local players to fill the emerging void, reports Festus Akanbi
In what looks like a precursor to the anticipated gale of acquisitions in the nation’s oil industry under the current political dispensation, the public disclosure of the planned acquisition of the Nigerian Agip Oil Company (NAOC), a subsidiary of Italian energy group, Eni, by Oando Plc, a Nigerian multinational energy company operating in the upstream, midstream and downstream, is set to break the glass ceiling in the history of acquisitions for value in Nigeria.
On Monday, it was reported that Italian oil major Eni has signed an agreement with Oando, an energy solutions provider listed on both the Nigerian and Johannesburg Stock Exchange, for the sale of all its stake in Nigerian Agip, a wholly-owned subsidiary focusing on onshore oil and gas exploration and production in Nigeria, as well as power generation.
Analysts reacting to the audacious move by Oando said the acquisition should be seen as a pointer to the important role indigenous actors will play in the future of the Nigerian upstream sector apart from the mileage the investment decisions will give the Nigerian company which is quoted both in Nigeria and in Johannesburg stock exchange.
Based on 2021 reserves estimates, Oando said its total reserves stand at 503.3m barrels while the transaction will deliver a 98 per cent increase. In addition, the transaction grows Oando’s exploration asset portfolio through the acquisition of a 90 per cent interest in OPL 282 and a 48 per cent interest in OPL 135. The sale is expected to nearly double Oando’s reserves to 996 million barrels of oil equivalent.
Taking Advantage of Acquisition Opportunities
Those familiar with Oando’s statement of mission weren’t surprised at the bold steps being taken to position the company as a leading integrated energy company operating in Africa. The company said the acquisition, which is subject to necessary regulatory approval will give Oando the scale and capability to pursue a range of new projects and acquisition opportunities. These, the company listed to include a multitude of farm-in and acquisition opportunities to realise its medium-term to long-term strategy. According to the company, its immediate focus is on Nigeria, saying it is evaluating other opportunities in the Gulf of Guinea.
Analysts said right now, international oil companies are increasingly focused on deeper offshore opportunities and have undertaken major onshore divestments, thus offering unique acquisition opportunities for indigenous independents in reserves, resources, and production.
The latest acquisition by Oando did not come as a surprise to oil industry watchers given the path which the company has threaded since its formation. Oando sees Nigeria as the bedrock of its stable of assets which is also crucial in its near-term strategy of acquiring near-producing fields. It maintains that it has successfully built a vast portfolio of oil and gas assets and acts as both operator and partner to Nigerian and Multinational companies. OER holds interests in 14 licenses for the exploration, development and production of oil and gas assets located onshore, swamp, and offshore.
Organic Growth
The Company has strategically focused its growth on organic means through the optimisation of its existing portfolio, developing proven but undeveloped assets; and inorganic means, through governmental bid rounds, as well as acquiring unutilised near-term production assets from international oil companies during divestment programmes.
Oando PLC is organised functionally into several operating divisions: Upstream: Oando Energy Resources (OER, The leading indigenous exploration and production company in Nigeria) and downstream- Oando Vitol and Helios (OVH Energy), Oando Trading.
Oando Energy Resources is a leading African exploration and production company. An independent oil and gas company with world-class operations, the company is at the cutting edge of Africa’s upstream sector, with significant investments in a robust portfolio of oil and gas fields, as well as participating interests in onshore and offshore producing assets.
NAOC, on its part, has interests in four onshore blocks and two onshore exploration leases as well as two power plants in Nigeria. Apart from Oil Mining Leases (OML) 60, 61, 62, 63, NAOC also has interests in the Okpai 1 and 2 power plants with a total nameplate capacity of 960 megawatts as well as in two Onshore Exploration Leases (OPL) 282 and 135, for which it also holds operatorship.
However, NAOC’s participating interest in the Shell Production Development Company (SPDC) Joint Venture of 5 per cent, is not included in the perimeter of the transaction and will be retained in Eni’s portfolio.
“Following the transaction completion with Oando PLC, Eni will maintain its presence in Nigeria through Nigerian Agip Exploration (NAE) and Agip Energy and Natural Resources (AENR), reiterating the company’s commitment to its employees health and safety, as well as to the environment.
Also in a statement announcing its agreement with Eni for the acquisition of 100 per cent of the shares of NAOC, Oando listed some of the highlights of the deal as the increase in its current participating interests in OMLs 60, 61, 62, and 63 from 20 per cent to 40 per cent.
It also increases Oando’s ownership stake in all NEPL/NAOC/OOL JV assets and infrastructure which include 40 discovered oil and gas fields, of which 24 are currently producing, approximately 40 identified prospects and leads, 12 production stations, approximately 1,490 km of pipelines, three gas processing plants, the Brass River oil terminal, the Kwale-Okpai phases 1 & 2 power plants and associated infrastructure.
Unlocking Opportunities for Indigenous Actors
The man behind the record-making deal, who is also the Group Chief Executive of Oando PLC, Wale Tinubu, said that the agreement underscored the role indigenous actors will play in the future of the Nigerian upstream sector.
“The synergies created by this acquisition will unlock unparalleled opportunities for us to re-align expectations, enhance efficiency, optimise resource allocation, and significantly increase production.”
Tinubu explained that the latest investment decision aligns with the company’s strategy of acquiring, enhancing, appraising, and efficiently developing reserves, adding that “Today’s announcement is not just an important milestone for the future of Oando; it brings to bear the important role indigenous actors will play in the future of the Nigerian upstream sector.”
According to Tinubu, having achieved the significant milestone, Oando was looking forward to closing the transaction and harnessing the full potential of the enhanced platform to accrue value for local communities, stakeholders and shareholders.
Tinubu and Oando’s Success Story
Tinubu, who began his career in 1990 as an attorney, specialising in corporate and petroleum law assignments, has no doubt, carved out an enviable position as one of Nigeria’s most venerable dealmakers, placing himself atop the pecking order in Nigeria’s oil industry. The company has become an African success story. It now has six subsidiaries; Oando Production and Development Company; Oando Refinery; Oando Trading Company; Oando Marketing; Oando Power Company; and Oando Energy Services. It has over 500 petrol stations in Nigeria, Ghana, Togo, the Republic of Benin, and Sierra Leone.
Like the other assets in contention, it was learnt that the current deal will have to be approved by the Nigerian Upstream Petroleum Regulatory Commission (NURPC).
It is also expected that the Nigerian National Petroleum Company Limited (NNPC), if interested in the deal, will have the right of first refusal of the oil, gas and power assets as per the Joint Operating Agreements (JOA).
