Company shifts away from downstream trading, invests heavily in upstream growth and asset integrity.
Oando Plc’s financial results for 2025 reveal a company in transition. While upstream production rose sharply, the energy firm recorded an 82% plunge in gross profit to N27.8 billion, highlighting deep margin pressure across its operations.
The results, filed as unaudited figures to the Nigerian Exchange (NGX) on February 2, 2026, show that the sharp profit decline came even as the company increased its oil and gas output by 32% year-on-year—a sign that the drop was driven more by changes in revenue mix and pricing than by operational weakness.
A Year of Strategic Repositioning, Not Operational Decline
Oando’s 2025 performance was marked by shrinking top-line revenue and tightening margins despite expanded upstream activity. Revenue declined by 21% to N3.21 trillion, down from N4.07 trillion in 2024, as the company intentionally reduced its exposure to refined-product trading.
The drop in gross profit—from N155.9 billion in 2024 to N27.8 billion—was attributed to margin compression across crude oil, gas, and natural gas liquids, and was compounded by accounting adjustments. Operating profit also fell sharply, down 91% to N50.2 billion, reflecting the squeeze on margins and non-cash accounting impacts.
Yet, despite these setbacks, profit after tax rose 10% to N241.3 billion, supported by non-operating gains, underscoring that the company’s financial resilience came largely from non-operating sources rather than core operations.
Upstream Expansion Underpins Cash Flow
The company’s upstream business delivered strong volume growth. Average production increased to 32,482 barrels of oil equivalent per day (boepd), driven by the full-year consolidation of the Nigerian Agip Oil Company (NAOC) Joint Venture assets. Crude oil liftings rose 30%, while gas sales climbed 59%, helping to support cash generation amid weak trading margins.
Oando’s management said 2025 was a “transition year” focused on moving from asset integration to execution. CEO Wale Tinubu noted that the company reinforced asset integrity and security, improving uptime and delivering a 32% increase in total production.
“Operated Joint Venture production averaged approximately 80,545 boepd, translating to 32,482 boepd net to Oando,” Tinubu said, adding that the company made early progress in its development drilling programme, including the successful completion of the Obiafu-44 gas-condensate well—the first of a planned 36-well programme.
Margin Pressure Driven by Price and Mix, Not Capacity
Analysts say the gross profit decline reflects a deliberate shift in strategy rather than a loss of operational capability. Oando reduced its reliance on downstream trading—a sector affected by subsidy removal and pricing liberalisation—while boosting upstream development.
Despite lower trading volumes, the cost of sales fell in line with reduced activity, but not enough to prevent margin erosion. Average realised crude oil prices also dropped to $65.23 per barrel, from $73.91 in 2024, limiting the benefits of higher production.
Heavy Capex Signals Long-Term Growth Focus
Capital expenditure surged to N101.9 billion, up from N18.5 billion the previous year, as the company increased spending on upstream development and asset integrity. This sharp rise underscores Oando’s commitment to long-term production growth, even at the expense of short-term profitability.
Balance-Sheet Moves to Support Growth Strategy
Oando also took several steps to strengthen its balance sheet and support its growth plan. In August 2025, the Group executed the first tranche of a 1.28 billion share distribution programme, issuing one fully paid share for every twelve held. A second tranche is expected, pending Board approval.
The company also plans further equity raising and debt conversion proposals, to be presented at an upcoming AGM/EGM, as part of ongoing capital restructuring efforts. These measures are aimed at reducing legacy obligations and positioning the business for more resilient earnings as it heads into 2026.