Oando’s 2025 gross profit falls 82% despite 32% production growth as margin pressure and strategy shift impact earnings

Oando Plc reported an 82% drop in gross profit for 2025, even as the company boosted upstream oil and gas production by 32%, reflecting a strategic shift away from downstream trading.

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The energy firm posted a gross profit of N27.8 billion for the year ended December 31, 2025, down sharply from N155.9 billion in 2024, while revenue declined 21% to N3.21 trillion.

Analysts attributed the decline primarily to margin compression across crude oil, gas, and natural gas liquids, alongside lower realised crude oil prices averaging $65.23 per barrel, down from $73.91 in 2024.

Operating profit fell 91% to N50.2 billion, despite strong upstream volumes.

Average production reached 32,482 barrels of oil equivalent per day (boepd) net to Oando, driven by the full-year consolidation of Nigerian Agip Oil Company Joint Venture assets.

Crude oil liftings rose 30%, while gas sales increased 59%, supporting cash flow amid weak trading margins.

CEO Wale Tinubu described 2025 as a “transition year,” noting that the company reinforced asset integrity, improved uptime, and began its development drilling programme, including the successful Obiafu-44 gas-condensate well the first of a planned 36-well initiative.

Profit after tax, however, rose 10% to N241.3 billion, supported by non-operating gains, highlighting financial resilience despite operational margin pressure.

Capital expenditure surged to N101.9 billion, up from N18.5 billion, reflecting investment in upstream development and long-term growth initiatives.

To support its growth strategy, Oando also executed the first tranche of a 1.28 billion share distribution programme in August 2025 and plans further equity raising and debt conversion proposals for 2026, aimed at reducing legacy obligations and enhancing financial resilience.

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Analysts say the results demonstrate a deliberate pivot toward upstream development and asset integrity, with short-term profitability sacrificed for sustainable long-term growth.