Oando PLC (NGX: OANDO) – A Volatile Titan in Nigeria’s Energy Sector

Investment Summary

Oando PLC (NGX: OANDO), Nigeria’s leading indigenous energy player, has delivered a rollercoaster performance over the past 12 months, with its stock rising approximately 100%-200% from an estimated N15-N20 in March 2024 to N40-N45 by March 24, 2025, despite a 51% pullback from its September 2024 peak of N98.40. This reflects a tale of two halves: a meteoric 390%-550% rally through Q3 2024, fueled by acquisition-driven optimism and market exuberance, followed by a sharp correction amid operational headwinds and governance noise. While Oando’s fundamentals—bolstered by the NAOC acquisition and a 45% revenue jump to N4.1 trillion in FY 2024—suggest resilience, persistent allegations of corruption tied to its Tinubu family connections and regulatory stumbles have clouded its narrative. We assign a Neutral rating with a 12-month target price of N50, balancing growth potential against elevated risks.

Stock Performance: A Year of Peaks and Troughs

• Starting Point (March 24, 2024): Oando’s stock traded in the N15-N20 range, building on a recovery from its 2023 low of N8.30. Market cap hovered around N200 billion, reflecting cautious optimism post-Tinubu presidency onset.
• H1 2024 Surge: By June 2024, shares climbed to N30-N40, driven by a 51% revenue increase to N2 trillion (H1 2024 unaudited results) and anticipation of the $783 million NAOC acquisition from Eni, finalized in August.
• Peak (September 10, 2024): The stock hit a 52-week high of N98.40, pushing market cap to N1.223 trillion—a 508% gain in Tinubu’s first year as president. Trading volume spiked, with 470 million shares exchanged from October 2024 to January 2025, per NGX data.
• Q1 2025 Sell-Off: Post-peak, Oando shed 51% of its value, dropping to N40-N45 by March 24, 2025, as sell pressure mounted. Market cap fell to ~N600 billion, per AfricanPeacemag, reflecting profit-taking and sentiment shifts.

Yearly Gain: Despite the correction, Oando’s 100%-200% net return outperforms the NGX All-Share Index (37.65% in 2024), underscoring its volatility and speculative appeal.

Key Drivers of Performance

1. Operational Momentum:

• The NAOC acquisition boosted production to 23,911 boe/day in FY 2024 from 23,258 boe/day in 2023, with peak operated output hitting 103,206 boe/day. H1 2024 profit-after-tax reached N62.6 billion, though FY 2024 PBT fell 53.6% to N47.78 billion due to cost pressures.
• Revenue growth (45% to N4.1 trillion) reflects higher crude volumes and forex gains, offset by Niger Delta sabotage and a 55% drop in traded refined products.

1. Market Sentiment:

• Early gains tied to Tinubu family optimism (CEO Wale Tinubu is the president’s nephew) fueled a speculative bubble. Post-peak, sentiment soured as investors reassessed fundamentals amid a broader energy sector sell-off.

1. Regulatory Friction:

• NGX suspended Oando’s stock in October 2024 for delayed FY 2023 filings, lifting it only after compliance. A failed PR push via influencers deepened distrust, per X chatter.

Corruption and Malfeasance: A Persistent Overhang

Oando’s performance cannot be divorced from governance concerns, though no new definitive evidence of corruption emerged in 2025:

• Historical Context: The 2017 SEC probe into financial mismanagement (resolved without charges) lingers in investor memory, setting a skeptical tone.
• Tinubu Ties: X posts (e.g., @KenWiwa4, March 20, 2025) allege Oando benefits from political favoritism, citing its Malta blending plants and $9.64 billion in FG petroleum imports. No official documentation substantiates ownership claims linking President Tinubu to Oando or Malta refineries, per NNPC denials.
• Market Perception: Allegations of opacity—e.g., delayed filings and unproven nepotism claims—amplified the Q1 2025 sell-off. @SamuelMunyeza (March 20, 2025) tied the 51% value drop to “Tinubu dynasty” skepticism, though this remains speculative.
• Regulatory Noise: The NGX suspension and shareholder unrest over a potential delisting (announced in 2024) signal governance risks, eroding confidence despite operational wins.

While these issues haven’t yielded convictions or fines in the past year, their recurrence in public discourse has likely capped upside, contributing to the post-September correction.

Valuation and Outlook

• Current Metrics: At N40-N45, Oando trades at a P/E of 2.17x and P/B of -2.86x (negative book value), per Proshare’s FY 2024 analysis, suggesting undervaluation relative to earnings but structural balance sheet weakness.
• Target Price: Our DCF model, factoring 2025 production growth (targeting 45,000 boe/day net) and Brent at $85/bbl, yields a N50 target (+11%-25% upside). Risks include further sabotage and forex volatility.
• Catalysts: Cost optimization and a three-rig drilling program could lift output, while clarity on delisting plans may stabilize sentiment.
• Downside Risks: Escalating governance allegations or a crude price drop below $70/bbl could push shares to N30.

Investment Recommendation: Neutral

Oando’s operational strides and undervalued stock offer upside, but governance overhangs and market volatility temper enthusiasm. We recommend a Neutral stance, advising investors to monitor regulatory developments and Q1 2025 earnings for signs of sustained recovery. For risk-tolerant clients, Oando remains a speculative play in Nigeria’s energy transition; conservative portfolios should await clearer skies.

Note: This report is based on public data and does not constitute investment advice. Past performance is not indicative of future results.