Nestoil invests $28m in rigs to lift OML 42 production

Ernest Azudialu-Obiejesi has put about $28 million into two drilling rigs because renting them in Nigeria had become too difficult and too expensive.

The Nestoil Group chairman said in a statement on Monday that the investment was driven by the need to reduce dependence on hired drilling equipment, which he described as increasingly hard and costly to secure in the Nigerian operating environment. As a holder of interests in the OML 42 licence, the group needed reliable in-house capacity to carry out workovers, revive mature wells and eventually drill new ones.

One of those rigs has now worked for the first time. The Pathfinder 500, operated through Scorpio Drilling International, a Nestoil business unit, completed workovers on two producing wells in the Niger Delta block without a health, safety or environment incident. The company said the work lifted output from the asset.

It also said this was the rig's first productive deployment since Nestoil acquired it roughly eight years ago.

Azudialu-Obiejesi said the refurbishment, crewing and deployment were carried out entirely by Nigerians and that the current crew is wholly Nigerian. He credited decades of training by the international oil companies operating in the country for the availability of that expertise, and said Nigerian personnel are now working in other oil-producing states.

Owning two working rigs, he argued, matters beyond his own group, because it adds to the country's indigenous drilling capacity rather than to the fleet of contractors hiring equipment in.

The spending comes while the same group is under sustained pressure from its lenders.

A consortium led by FBNQuest Merchant Bank and First Trustees put Nestoil's outstanding debt at $1,084,157,611.20 and 469.4 billion naira as of June. It says Azudialu-Obiejesi personally guaranteed further sums owed to Access Bank, First Bank and Zenith Bank. He disputes the basis and the scale of the claim.

On Aug. 17 the Economic and Financial Crimes Commission said Nestoil had paid $60 million to those lenders under a structured repayment plan agreed at a meeting chaired by commission chairman Olanipekun Olukoyede. The commission had opened an investigation into what it called the alleged criminal aspects of the transactions between the two sides, and what emerged was a payment schedule.

The dispute began in October 2025, when the Federal High Court in Lagos granted an ex parte freezing order over the assets, accounts and shareholdings of Nestoil, Neconde Energy, Azudialu-Obiejesi and his wife Nnenna, and a receiver took possession of Nestoil Towers in Victoria Island along with control of Neconde's 45% interest in OML 42. The Supreme Court set that freeze aside on June 1, holding that the Court of Appeal had exceeded its jurisdiction. The lenders called the ruling at best a pyrrhic victory and said recovery had only just begun.

Production is what services a repayment schedule, which is the commercial logic behind spending on rigs during a debt fight.

OML 42 covers 814 square kilometres onshore in the western Niger Delta and holds 2P reserves of 600 million barrels across seven producing fields and five undeveloped discoveries. It produced about 250,000 barrels of oil equivalent a day at its 1974 peak before being shut in during 2005 over security problems.

Neconde bought its 45% interest in 2011 from Shell, Total and Agip for about $600 million, when the asset was producing 15,000 barrels a day. Output has since risen to roughly 15,000 in 2023, 25,000 in 2024 and 50,000 by May 2025. The Nigerian National Petroleum Development Company holds the remaining 55%.

Nestoil has not disclosed how much production the two workovers added.

Azudialu-Obiejesi began trading in 1983 under the name Obijackson and founded Nestoil in 1991. The group spans oil services and upstream production and employs more than 3,000 Nigerians directly.