Oando Plc, on Wednesday, announced an increase in its Reserve Based Lending (RBL2) facility to $375 million.
A reserve-based lending facility is a type of loan commonly used in the oil and gas industry, where the amount a company can borrow is determined primarily by the value of its proven oil and gas reserves. Financing arrangements for the acquisition, development, and operation of oil and gas assets have commonly been structured as RBLs.
The facility refinancing secured was led by the African Export-Import Bank (Afreximbank) with the support of Mercuria, extending the final maturity date of the facility to January 30, 2029.
Under this model, the amount borrowed by Oando is directly tied to the size and value of its proven reserves, standing at 1.0 Bnboe. This is referred to as the Borrowing Base.
This upsizing was a result of the company’s progress in deleveraging, having reduced the original $525 million RBL2 facility, signed in 2019, to $100 million by the close of 2024.
Speaking on the feat, Group Chief Executive, Oando, Wale Tinubu was quoted to have said:
“We are pleased to have completed the upsizing of our RBL2 facility, a strategic milestone that reinforces our commitment as Operator of the Oando-NEPL JV to maximising the value of our expanded asset portfolio.
“Our Joint Venture holds extensive reserves with the potential to generate over $11 billion in net cashflows to Oando over the assets’ life. This working capital facility is a critical enabler towards efficiently extracting and monetising these resources.
“We appreciate the continued partnership of Afreximbank and Mercuria, whose unwavering support underscores their alignment with our long-term focus on maximising production, optimising asset performance, and delivering sustainable value to all stakeholders.”
It stated that the newly secured capital injection would be strategically deployed to aggressively pursue key growth initiatives, including accelerated drilling campaigns, critical infrastructure upgrades across its operations, and the implementation of advanced operational efficiencies throughout its portfolio.
These strategic investments directly support the company’s stated ambition to significantly increase its production levels to 100,000 barrels of oil per day (bopd) and 1.5 billion cubic feet (Bcf) of gas per day by the end of 2029.
The development followed Oando’s $783 million acquisition of the Nigerian Agip Oil Company (NAOC) from Italian energy company, ENI, in August 2024.
This acquisition expands Oando’s operational landscape, incorporating twenty-four currently producing fields, approximately forty identified exploration prospects and leads, twelve key production stations, a network of approximately 1,490 km of pipelines, three gas processing plants, the Brass River Oil Terminal, the Kwale-Okpai phases 1 & 2 power plants boasting a total nameplate capacity of 960MW, and other associated infrastructure.
The development comes after the company on Wednesday announced a record 267 per cent increase in its Profit After Tax (PAT) for the financial year ended December 2024, on the back of its recent successful acquisition of the Nigerian Agip Oil Company Limited.
In a statement on its audited financial results for the period under consideration, Oando stated that its profits rose significantly from N60 billion in 2023 to N220 billion in 2024, driven mainly by higher upstream output and FX gains.
It recorded a revenue rise of 44 per cent to N4.1 trillion in 2024 from N2.9 trillion the previous year, while reserves grew by 95 per cent from 505 million barrels in 2023 to 983 million barrels of oil equivalent last year.
The company noted that its $550 million crude prepayment contribution to the Nigerian National Petroleum Company’s (NNPC) Project Gazelle.
Recall that Oando played a pivotal role in Project Gazelle, a $3.3 billion crude oil-backed forward-sale finance facility sponsored by the NNPC and arranged by Afreximbank, with a view to enhancing volume security.
In his remarks on the release of the financial statement, Wale Tinubu described 2024 as a ‘defining year’ for the company, stating that looking ahead, 2025 will be the company’s year of execution.
In all, capital expenditures totalled N19 billion in 2024, down from N45 billion in 2023, reflecting the focus on completing the NAOC acquisition, while development activity is expected to ramp up in 2025. Natural Gas Liquids (NGL) production also decreased by 35 per cent, while gas was down 5 per cent.
Oando stated that its zero routine flaring programme remains on track for 2027 completion, in line with national and Joint Venture (JV) commitments, with a 92 per cent reduction achieved to date.
In terms of its clean energy drive, Oando stated that its electric mass transit programme delivered 121,145 km of service, transporting 205,152 passengers and avoiding over 163,500kg of CO₂ emissions and secured 5,100 tons/month PET offtake commitments, progressing the development of a recycling plant. It further highlighted the launch of 50 new electric buses.
It said the company is focused on post-acquisition optimisation and accelerated value delivery across upstream assets, with a production guidance of 30,000–40,000boepd and trading guidance of 25–35 million barrels of crude oil as well as 750,000–1m MT of refined products.
