Key Points
- Share Price Boost: The acquisition is expected to enhance Oando’s share price significantly.
- Regulatory Confirmation: The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has confirmed the acquisition.
- Increased OML Interests: Oando’s participating interests in OMLs 60, 61, 62, and 63 have risen from 20 per cent to 40 per cent.
- Major Divestments: The acquisition is part of broader significant divestments in Nigeria’s oil and gas sector, including deals involving SPDC, Renaissance, Equinor-Project Odinmim, and ExxonMobil/Seplat.
- Deepwater Production: Emphasis on addressing the decline in deepwater production and increasing rig counts, which have risen from 10 in June 2023 to 34 in 2024.
- Regulatory Compliance: Importance of adhering to regulatory processes to protect national interests and ensure a smooth transition.
Oando PLC saw its stock surge by 9.9 per cent on Thursday, closing at N15.50 from its opening price of N14.10, following the acquisition of the Nigerian Agip Oil Company Limited (NAOC Ltd). This increase translates to a N1.40 gain per share, adding N10.5 billion to the overall value of shareholders’ stakes in the company.
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) earlier announced that Oando PLC has completed the acquisition of 100 per cent shares of Nigerian Agip Oil Company Limited (NAOC Ltd).
Stockbroker’s Perspective
Stockbroker Mr Charles Fakrogha, who spoke with Arbiterz on Thursday, said the successful acquisition of NAOC Ltd could significantly boost investor confidence, provided due process is followed. He highlighted the importance of adhering to proper acquisition procedures to ensure that the new entity operates dynamically and successfully in the oil and gas industry.
Benefits for Shareholders
Fakrogha expressed optimism that the acquisition would not only benefit Oando but also increase the value of its shares for shareholders. He stressed the importance of transparency, accountability, and legal compliance in such corporate transactions to safeguard all stakeholders’ interests.
Also Read: Tolaram Group to Acquire Majority Shares in Guinness Nigeria as Diageo Exits
The cautionary advice provided by Fakrogha underscores the complexities and potential risks associated with mergers and acquisitions in the oil and gas sector.
He further stated, “Ensuring a smooth and well-regulated acquisition process is essential for safeguarding the interests of all involved stakeholders and fostering sustainable growth and profitability for the newly combined entity.”
Regulatory Confirmation
Gbenga Komolafe, Chief Executive of the NUPRC, announced at the Oil and Gas Conference and Exhibition in Abuja that Oando PLC has completed the acquisition of 100 per cent of NAOC Ltd. The deal increases Oando’s participating interests in OMLs 60, 61, 62, and 63 from 20 per cent to 40 per cent.
Major Divestments in Nigeria
Komolafe also provided updates on other significant divestments in Nigeria. The NAOC-Oando divestment has been concluded, with the signing ceremony set for the coming days.
Similarly, the Equinor-Project Odinmim divestment has also been completed, and documents related to the SPDC-Renaissance deal are undergoing due diligence.
Regarding the ExxonMobil/Seplat deal, Komolafe mentioned that the concerned parties have expressed a commitment to apply for ministerial consent to the NUPRC, although the process is still pending. He emphasised the importance of regulatory compliance to ensure a smooth transition and protect national interests.
Outlook for Deepwater Production
Komolafe highlighted the need for Nigeria to address the decline in deepwater production, which has fallen from 40 per cent to 30 per cent of daily production. He noted a significant increase in rig counts from 10 in June 2023 to 34 in 2024 and stressed the need for more rigs and proper fiscal measures to sustain deepwater production.
The acquisition of Agip by Oando marks a significant milestone for the company and its shareholders, with the potential for increased share value and enhanced investor confidence. Regulatory authorities play a crucial role in ensuring due process and compliance, which will be essential in safeguarding the interests of all stakeholders involved in this major transaction.
