Nigerian oil tycoon Adewale Tinubu’s Oando suffers $320 million in losses in 2020

Oando, a Nigerian integrated energy solutions provider led by oil tycoon Adewale Tinubu, has reported a N132.57-billion ($320 million) loss at the end of its 2020 fiscal year, which ended on Dec. 31, owing to a double-digit decline in revenue.

The financial performance, which comes after nearly two years of legal disputes, marks the oil and gas company’s second consecutive year of losses, bringing its total losses from operations since January 2018 to N340 billion ($819.3 million).

According to Oando’s recently published financial statement, the company’s losses at the end of 2020 dropped by 36 percent from N207.1 million ($500 million) in 2019 to N132.6 million ($320 million) due to a 15-percent drop in revenue from N576.6 million ($1.39 billion) to N490 million ($1.18 billion).

Revenue for the period was directly impacted by volatile product pricing that resulted from the economic impact of COVID-19, with realized average crude oil prices falling by 45 percent to $34.21 per barrel, from $62.59 per barrel in 2019, and natural gas dropping 24 percent to $7.13 barrel of oil equivalent, from $9.37 per barrel of oil equivalent in 2019.

While commenting on the group’s financial performance, Tinubu, the group CEO, stated that 2020 proved an unprecedented year for the world economy due to COVID-19. It was one of the most challenging periods in the company’s history, he said, as it witnessed the lowest oil prices since it entered Nigeria’s upstream sector in 2008, which negatively impacted its revenue for the period.

Tinubu added that the group had to impair a portion of its goodwill on its balance sheet due to the disruption of its operations during the year to ensure that the carrying value of its assets was reflected in its current operating environment.

Oando spent $82.8 million on capital expenditures related to the development of oil and gas assets and exploration and evaluation activities in the fiscal year ending Dec. 31, 2019, compared to $78.8 million during the previous year.

The $82.8 million in capital spending in 2020 was made up of $80.0 million on oil and gas properties at OML 60 to 63, $1.5 million at OML 56, and $1.3 million on other assets.