Oando Plc recorded a sharp 82% decline in gross profit to N27.8 billion in the 2025 financial year, highlighting mounting margin pressures despite a strong increase in upstream oil and gas production.
The indigenous energy company disclosed this in its unaudited results for the year ended 31 December 2025 which was filed to the Nigerian Exchange (NGX) on Monday, February 2, 2026.
While production volumes rose 32% year-on-year, the steep drop in gross profit reflects a shift in revenue mix, lower realised commodity prices, and the impact of accounting adjustments, signalling a year of strategic repositioning rather than operational weakness.
What the data is saying
Oando’s financial performance in 2025 was characterised by a sharp contraction in topline and margins, even as upstream activity expanded significantly. Gross profit fell from N155.9 billion in 2024 to N27.8 billion, while revenue declined 21% to N3.21 trillion.
- Revenue declined to N3.21 trillion from N4.07 trillion in 2024, reflecting a deliberate scale-back of refined-product trading.
- Gross profit dropped 82% year-on-year to N27.8 billion, driven by margin compression across crude oil, gas, and natural gas liquids.
- Operating profit fell 91% to N50.2 billion, underscoring the impact of lower margins and non-cash accounting items.
- Profit after tax rose 10% to N241.3 billion, supported by non-operating gains despite weaker operating performance.
Despite the weaker margins, upstream production increased materially, with average output rising to 32,482 barrels of oil equivalent per day (boepd), following the full-year consolidation of the Nigerian Agip Oil Company (NAOC) Joint Venture assets.
More insights
The decline in gross profit was largely a function of revenue composition rather than a deterioration in core operational capacity. Oando intentionally reduced exposure to high-volume, low-margin downstream trading as Nigeria’s downstream market adjusted to subsidy removal and pricing liberalisation.
- Cost of sales declined in line with lower trading volumes, but this was insufficient to prevent margin erosion.
- Average realised crude oil prices fell to $65.23 per barrel from $73.91 in 2024, limiting the earnings upside from higher production volumes.
- Capital expenditure increased sharply to N101.9 billion from N18.5 billion, reflecting renewed investment in upstream development and asset integrity.
The company’s upstream segment provided partial support, with crude oil liftings rising 30% and gas sales volumes increasing 59% year-on-year, helping to stabilise cash generation amid weaker trading margins.
What the company is saying
Oando’s management said 2025 marked a transition year from asset integration to execution, with a focus on restoring production capacity and improving operational efficiency.
“2025 was a year of relentless execution as we successfully transitioned from the integration of the NAOC Joint Venture into operational delivery,” said Group Chief Executive Officer, Wale Tinubu.
“Over the year under review, we reinforced asset integrity, strengthened security across our operating areas, and materially improved uptime, delivering a 32% year-on-year increase in total production.”
“Operated Joint Venture production averaged approximately 80,545 boepd, translating to 32,482 boepd net to Oando, alongside a 30% increase in crude oil liftings and a 59% increase in gas sales volumes.”
Management noted that upstream gains were complemented by early progress on its development drilling programme, including the successful completion of the Obiafu-44 gas-condensate well, the first milestone in a planned 36-well programme.
Why this matters
Oando’s results underscore the financial trade-offs involved in repositioning away from downstream petrol trading toward upstream oil and gas development.
- While the strategy reduced revenue and near-term margins, it aligns the business with higher-value and more sustainable growth opportunities over the medium term.
- The significant increase in capital expenditure suggests the company is prioritising long-term production growth and asset reliability, even at the expense of short-term profitability.
However, sustained margin pressure and lower oil prices could continue to weigh on operating performance if not offset by higher volumes and improved cost efficiency.
What you should know
Oando undertook several balance-sheet and capital-structure initiatives during the year to support its growth strategy and improve liquidity.
- The Group executed the first tranche of its 1.28 billion share distribution programme in August 2025, issuing one fully paid share for every twelve shares held.
- A second tranche of the share distribution is expected, subject to Board approval.
- Oando plans to raise equity and convert debt as part of ongoing capital restructuring efforts, with proposals to be tabled at an upcoming AGM/EGM.
- Capital expenditure rose to N101.9 billion in 2025, focused on upstream development, facility integrity, and infrastructure upgrades.
These measures are aimed at strengthening the balance sheet, reducing legacy obligations, and positioning the company for more resilient earnings as it enters the 2026 financial year.
