Nigeria needs no further proof that it has significant oil and gas resources. The more consequential question is how much of those resources can be financed, developed, and converted into reliable production and cash flow.
That distinction matters. Reserves create potential value, but they do not fund themselves. Development wells must be drilled, existing wells restored, infrastructure maintained, and markets secured before resources underground become commercially useful volumes. As investors become more selective, the ability to demonstrate credible project economics, disciplined capital allocation and consistent execution will increasingly determine which assets attract funding.
Oando offers a useful case study. Following the expansion of its upstream portfolio, Renaissance Capital Africa estimates that Oando holds approximately 920 million barrels of oil equivalent in 2P reserves, comprising proved and probable reserves, with gas accounting for about 61 per cent of the total. That is a substantial resource base for an indigenous producer. The investment question is now how efficiently and sustainably it can convert that portfolio into production, margins and cash.
There is evidence of operating progress. Oando’s reported average production increased by 32% year on year to 32,482 barrels of oil equivalent per day in 2025. In the first half of 2026, production reached 42,789 boepd, 16 per cent higher than the comparable prior-year period, while production operating costs declined by 18 per cent to US$16.83 per boe.
These improvements matter because they link the expanded asset base to operating performance. They are not, on their own, sufficient to establish the full value of the portfolio. Sustaining production growth will require continued investment, reliable infrastructure, effective project delivery and access to markets, particularly for gas.
Renaissance Capital’s forecasts illustrate the scale of the opportunity and the execution challenge. The firm projects working-interest production rising from 32.5 kboepd in 2025 to 145.4 kboepd by 2030. Its model assumes 62 development wells and 55 workovers between 2026 and 2030, supported by estimated drilling and workover expenditure of US$716m. Separately, Oando’s management has outlined a broader US$800m to US$1bn investment programme through 2030, covering drilling, workovers, infrastructure and asset integrity.
Gas may be the clearest example of the opportunity. It represents about 61 per cent of the estimated 2P reserve base but contributed less than a quarter of upstream revenue in 2025. Renaissance Capital forecasts gas production increasing from 26.7 kboepd in 2026 to 99.0 kboepd by 2030, with gas revenue rising from N140.8bn to N952.9bn over the same period.
The presence of processing infrastructure provides a foundation, but infrastructure alone does not guarantee monetisation. Capacity, reliability, evacuation, commercially viable pricing and credible long-term offtake must all align. Gas value will therefore depend as much on market development and execution as on the scale of the resource.
Oando’s valuation reflects both the potential and the work still required. Renaissance Capital estimates its enterprise value at approximately US$1.90 per boe of 2P reserves, compared with about US$4 to US$8 per boe for the peers in its comparison set. The discount cannot be explained by reserve quality alone. Leverage, financing costs, execution risk, production scale, liquidity and the market’s assessment of Nigeria-related risk are also relevant.
This means the valuation gap is an opportunity, not an entitlement. It will narrow only if operating performance and capital allocation demonstrate that more of the portfolio can be converted into durable cash flow while financial risk is reduced.
The recapitalisation program is central to the company’s next phase, but each component serves a different purpose. The proposed N500bn capital raise, anchored by a N200 billion rights issue and supported by additional instruments, is intended to provide equity capital for investment and balance-sheet support, although it will also dilute shareholders who do not participate. The bond programme of up to US$1.5bn would create financing capacity but, to the extent utilised, would add debt that must be serviced. The proposed US$300m RBL debt-to-equity conversion would reduce leverage but would not provide new cash and would also have dilution implications.
The relevant test is, therefore, not simply whether capital is raised, but how it is deployed and what returns it produces. New equity that funds high-return production growth and supports deleveraging can strengthen the investment case. Additional borrowing without corresponding cash generation would have the opposite effect.
Oando’s position reflects a broader Nigerian challenge. The country began 2026 with reported 2P crude oil and condensate reserves of 37.01 billion barrels and gas reserves of 215.19 trillion cubic feet. The Nigerian Upstream Petroleum Regulatory Commission has approved more than US$57bn of Field Development Plans since 2024, while major offshore projects expected between 2026 and 2030 could require a further US$30bn to US$50bn.
The project inventory is substantial. The constraint is converting it into investable, executable projects at a time when African energy competes with a wide range of global opportunities for capital.
This is why Nigeria’s energy story is increasingly a capital story. Resource ownership remains important, but value will accrue to companies that can combine strong assets with financeable development plans, operational discipline, reliable market access and credible governance.
For Oando, the portfolio is already in place. The next phase will be judged by whether the company can fund its development programme on sustainable terms, deliver the planned production growth, strengthen cash generation, and reduce financial risk. If it does, the market may attach materially greater value to the business. If it does not, the scale of the reserves will remain largely potential rather than realised value.
Oke, an energy executive, writes from Lagos
Provided by SyndiGate Media Inc. (Syndigate.info).
