OANDO Plc continues to show signs of financial distress as its total liabilities exceed its total assets, raising concern that it may default on its obligations to creditors.
The company’s nine-month results revealed the latest development amid the controversy that trailed its acquisition of Nigerian Agip Oil Company (NAOC) from Italian oil firm Eni.
On Monday, December 16, the indigenous oil company released its unaudited financial statements for the nine months ended September 2023 and 2024, respectively.
It showed that Oando’s total liabilities exceeded its total assets, wiping out shareholders’ funds.
A breakdown of the results is that Oando’s total assets stood at N7.84 trillion in September 2024, from N2.68 trillion in September 2023.
On the other hand, its total liabilities stood at N8.04 trillion in September 2024 from N2.94 trillion in September 2023.
This saw its negative balance sheets drop to N198.56 billion in September 2024 from N267.18 billion in September 2023.
The negative balances indicate the company’s suffering from asset deficiency, a situation where its liabilities exceed its assets.
It is a sign that Oando is still undergoing financial distress and indicates that it may default on its debt obligations to creditors and be headed for insolvency.
It also represents a red flag that Oando’s financial health might be in jeopardy, including negative cash flows, declining sales, and a high debt load.
The indigenous energy solutions provider was recently sanctioned for non-compliance with regulatory rules in the release of its 2023 audited financial statements by the Nigerian Exchange Group (NGX).
The NGX Regulation Limited (NGX RegCo), a wholly-owned subsidiary of the NGX Group, had suspended the trading of Oando’s shares on the floor of the exchange with effect from Thursday, October 24.
According to the NGX, the indigenous oil firm failed to submit its audited financial statements for the year ended December 31, 2023.
The Johannesburg Stock Exchange had in March suspended trading in Oando shares due to its inability to meet the extended deadline to publish its 2022 audited financial statements and after failing to meet the deadline to publish its interim results for 2023.
Oando has been reporting negative financial performance since 2019 and was on the verge of delisting from the Nigerian stock market in 2022.
Amid the financial distress, Oando, in August this year, announced its acquisition of the NAOC from Italian oil major Eni.
It said it secured a $650 million lending facility from the African Export-Import Bank (Afreximbank) as part of the $783 million used to acquire Agip Oil.
However, the acquisition drew concerns from former vicce president Atiku Abubakar who questioned President Bola Tinubu’s interest in Oando and the seemingly accelerated approval for the purchase of onshore assets in Agip while other transactions such as the Shell/Renaissance deal and the Mobil/Seplat continue to suffer delays.
Atiku even noted that Oando is owned by the incumbent president’s nephew, maintaining that Oando was being given undue and preferential treatment in the oil and gas sector to the detriment of more competent investors.