Oando Plc ended 2025 with a ₦204.81 billion profit, but beneath the headline earnings lies a company grappling with mounting debt, a severe liquidity squeeze, negative shareholders’ funds and regulatory compliance issues that have raised questions about its financial resilience.
The oil and gas group’s audited financial statements for the year ended December 31, 2025, released on Monday, show that while it remained profitable, much of that performance was supported by accounting adjustments, particularly a ₦69.05 billion income tax credit, rather than stronger operating earnings.
The results reveal a business under increasing financial pressure even as management insists it has laid the foundation for future growth following the acquisition of the Nigerian Agip Oil Company (NAOC) Joint Venture assets.
Revenue fell sharply to ₦3.18 trillion from ₦4.09 trillion in 2024, reflecting weaker top-line performance.
Operating profit also dropped significantly to ₦240.96 billion from ₦569.68 billion a year earlier, underscoring the pressure on the company’s core operations.
Despite weaker operating performance, Oando reported a profit after tax of ₦204.81 billion, largely supported by a tax credit, marking a sharp turnaround from the ₦163.7 billion tax expense recorded in 2024. Earnings per share also improved to ₦23 from ₦18 in the previous year.
However, the financial statements paint a more challenging picture of the company’s overall health.
Oando’s total liabilities climbed to ₦8.01 trillion, exceeding total assets of ₦7.45 trillion and leaving the company with negative equity of ₦566.97 billion. This means the company remains technically insolvent, with its obligations outweighing the value of everything it owns.
Its short-term financial position is equally stretched, with net current liabilities of ₦3.8 trillion at year-end and available cash and cash equivalents of just ₦439.9 billion, highlighting a significant funding gap.
The audited report also revealed that multiple defaults under the company’s Medium-Term Loan, Corporate Facility, and Reserve-Based Lending facilities forced Oando to reclassify long-term borrowings as current liabilities, increasing immediate repayment pressure on its cash flows.
Independent auditors further raised a material uncertainty over Oando’s ability to continue as a going concern, warning that the company’s financial position casts significant doubt on its capacity to sustain operations without the successful execution of its recovery plans.
The financial statements also disclosed outstanding legal claims amounting to ₦1.4 trillion, mainly relating to the company’s exploration and production interests in OML 60 to 63, adding another layer of uncertainty to its outlook.
In addition, auditors identified breaches of the Companies and Allied Matters Act (CAMA) 2020 relating to intra-group debt forgiveness between subsidiaries and the parent company, as well as treasury share transactions they considered inconsistent with statutory capital maintenance provisions.
Operationally, Oando also underperformed its own expectations, delivering only 57.4 per cent of its production target and 53 per cent of its revenue budget for the year, limiting its ability to generate sufficient cash to meet growing debt obligations.
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Rights Issue Becomes Critical to Oando’s Survival Strategy
Against this backdrop, Oando is banking on a proposed ₦500 billion capital-raising programme to restore its financial health and support its long-term survival.
The company plans to raise the funds through the issuance of up to 10 billion ordinary shares using a combination of rights issues, public offerings, private placements and debt-to-equity conversions.
Management has already applied to the Securities and Exchange Commission for approval to launch the first ₦220 billion rights issue, targeted for 2026, while the remaining tranche is expected later in the year.
The capital raising is expected to substantially reduce the company’s negative equity of ₦566.97 billion, strengthen shareholders’ funds and provide liquidity to address the ₦3.8 trillion working capital deficit.
As part of the broader recapitalisation plan, Oando also intends to convert up to $300 million of its existing Reserve-Based Lending debt into equity, reducing liabilities while strengthening its balance sheet.
The programme enjoys significant backing from its majority shareholder, Ocean and Oil Development Partners Limited (OODP), which has committed to fully subscribe to its rights entitlement and underwrite any shares not taken up by minority investors.
The company’s operations are also currently supported by a Letter of Guarantee from OODP, valid until March 2027, providing additional financial support while the recapitalisation programme progresses.
Despite the financial challenges, management maintains that operational performance improved considerably following the acquisition of the NAOC Joint Venture assets.
Commenting on the results, Group Chief Executive Officer, Wale Tinubu, said, “FY 2025 marked our first full year of operational execution following the acquisition of the NAOC Joint Venture assets and represents an important milestone in Oando’s evolution.”
He added that after completing the integration phase, “our focus shifted to operatorship, operational excellence, and value realisation across the enlarged portfolio.”
According to Tinubu, improved asset integrity, stronger security and higher operational uptime helped lift production by 32 per cent year-on-year to 32,482 barrels of oil equivalent per day net to Oando.
He also highlighted the completion of the Obiafu-44 gas-condensate well as “our first operated development well following the assumption of operatorship,” describing it as evidence that indigenous operators can execute complex energy projects while creating long-term value.
Tinubu said the company also repositioned its trading business away from lower-margin petrol imports toward higher-margin crude oil and gas opportunities, a move that “strengthened liquidity, improved cash generation, and enhanced the business’s resilience.”
Looking ahead, he expressed confidence that the company is better positioned for growth despite the financial headwinds.
“With operational control firmly embedded, a strong reserves base, and improving financial flexibility, we are well-positioned to build on the momentum achieved in 2025 and enter 2026 from a position of strength,” Tinubu added.
Alex is a business journalist cum data enthusiast with the Pinnacle Daily. He can be reached via ealex@thepinnacleng.com, @ehime_alex on X