Oando Plc, a leading energy company in Nigeria, has successfully completed the acquisition of Nigerian Agip Oil Company (NAOC), a subsidiary of Italy’s oil giant Eni. This landmark transaction, valued at $783 million, marks a significant milestone in Oando’s strategic expansion and the ongoing trend of international oil companies divesting from offshore operations in Nigeria.
Oando, which is publicly traded on both the Lagos and Johannesburg stock exchanges, announced the completion of the deal on Thursday, nearly eleven months after the initial agreement was struck. The acquisition aligns with Oando’s long-term strategy to scale up its upstream operations and strengthen its foothold in the Nigerian oil and gas sector.
The transaction increases Oando’s stakes in Oil Mining Leases (OMLs) 60, 61, 62, and 63 from 20% to 40%, significantly enhancing its production and asset base. In a regulatory filing, Oando highlighted that the deal includes “forty discovered oil and gas fields, of which twenty-four are currently producing,” as well as approximately forty identified prospects and leads.
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The assets also encompass twelve production stations, 1,490 kilometers of pipelines, three gas-processing plants, the Brass River Oil Terminal, and the Kwale-Okpai phases 1 & 2 power plants, with a combined nameplate capacity of 960MW.
Oando’s CEO, Wale Tinubu, expressed optimism about the acquisition’s impact on the company’s operations and the broader Nigerian energy sector.
“It is a win for Oando and every indigenous energy player, as we take our destiny in our hands and play a pivotal role in this next phase of the nation’s upstream evolution,” Tinubu stated. “With our assumption of the role of operator, our immediate focus is on optimizing the assets’ immense potential, advancing production, and contributing to our strategic objectives.”
Impact of The Deal on Reserves and Cash Flow
This acquisition is expected to double Oando’s total reserves, with the company’s reserves jumping by 98% from 505.6 million barrels of oil equivalent (MMboe) to over 1 billion barrels of oil equivalent (Bnboe). The transaction is immediately cash-generative, and Oando anticipates a substantial boost to its cash flows as a result.
The acquisition also places Oando in a stronger position within the Nigerian energy sector, particularly as the company assumes the role of operator for the newly acquired assets. This operational control will enable Oando to optimize production processes and leverage the full potential of the assets, further enhancing its market position.
Oando’s acquisition of NAOC is part of a broader trend of international oil companies (IOCs) exiting offshore and shallow-water operations in Nigeria. These IOCs are increasingly focused on onshore activities, driven by challenges such as oil theft, pipeline vandalism, and security concerns that have adversely affected production.
In recent years, several major players have either completed or are in the process of completing similar divestitures. For instance, Norway’s Equinor and China’s Addax have entered agreements to sell their offshore assets, while Shell has reached a deal to divest its local subsidiary to a consortium of indigenous firms. ExxonMobil is also advancing a transaction to sell its shallow-water oil assets to Seplat, a deal valued at approximately $1.3 billion.
Eni, in a statement on its website, confirmed that the deal with Oando excludes its 5% participating interest in the Shell Production Development Company Joint Venture (SPDC JV). The Italian firm reiterated its commitment to Nigeria, stating that it will continue to operate in the country through investments in deep-water projects and Nigeria LNG, while also exploring new opportunities in the agri-feedstock sector.
Oando has experienced a remarkable 314% increase in its stock price since the beginning of the year, making it the second-best-performing stock on the Nigerian market. The completion of the NAOC acquisition is expected to strengthen Oando’s market position further and contribute to its long-term growth trajectory.
This acquisition is not only a significant milestone for Oando but also a reflection of the evolving dynamics within the Nigerian oil and gas industry, where indigenous companies are increasingly taking on larger roles in the sector.