5 Listed Oil Companies Post Net Profit of N47.34 Billion

Seplat Energy Plc and four other Nigerian Exchange (NGX) Limited oil and gas companies recorded a total net profit of N47.343 billion in the first half (H1) of the year 2022.

This is despite a strict regulatory environment due to lack of clarity on policy direction (e.g. postponement of PIA implementation), price controls and vandalism.

Capital market analysts noted that the daily consumption of petroleum products has increased due to the full lifting of pandemic restrictions and the sustained epileptic power supply of businesses and households.

After more than two decades of legislative gridlock, the long-awaited Petroleum Industry Act (PIA) was signed into law by President Muhammadu Buhari on August 16, 2021. The PIA aims to reposition the Nigerian oil and gas industry through reforms in four key areas. areas of governance, administration, host community welfare and fiscal arrangements.

Prior to full implementation, the PIA was extended by 18 months from its previous start date of February 2022.

At the same time, the net profit of Seplat Energy, Conoil, TotalEnergies Marketing Nigeria, Eterna and MRS Oil Nigeria increased by 96.57%, from 24.085 billion naira in the first half of 2021 to 47.343 billion naira in 2022.

More specifically, Seplat’s after-tax profit amounted to 35.4 billion naira for the first half of 2022, compared to 14.1 billion naira recorded in 2021, an increase of 151.1%.

noil reported a net profit of N1.8 billion, compared to N1.1 billion, while TotalEnergies reported a profit of N8.5 billion compared to N8.1 billion in the first half of 2021.

Eterna’s after-tax profit jumped to N1.253 billion from N433.035 million in 2021, while MRS Oil Nigeria’s net profit rose to N393.264 million more than the N351.813 million made in 2021 .

Regarding the performance of the sector, Afrinvest Limited said that the industry’s PAT has maintained a recovery trajectory since 2021.

The research firm said: “Across all of our hedges, we issued a ‘BUY’ rating on TotalEnergies and Conoil, while Ardova Plc’s valuation informed a ‘ACCUMULATE’ recommendation.

“For TotalEnergies, we expect its strong presence in the aviation turbine and jet fuel (ATK) and lubricants markets, along with a strong cost structure, to drive quality earnings growth. In the meantime, we expect Conoil’s effective implementation of cost control to propel impressive revenue and results. Ardova is focused on expanding product distribution capacity and optimizing costs to consolidate its position within the industry, which is positive for the short and long-term outlook.

“Compared to selected market peers (downstream) with an average P/E ratio of 14.1x, Nigerian downstream oil companies are priced at 3.5x. This discount highlights poor investor sentiment and weak prospects resulting from a strict regulatory environment due to a lack of clarity on policy direction (e.g. postponement of PIA implementation), price controls, redundant refineries and vandalism.

“However, we expect players in the sector to maintain their resilient performance and deliver decent returns to investors. We also expect the full implementation of the PIA to restore investment interest in the sector.

Investors Alternative Dispute Resolution Initiative (IADRI) Chairman Moses Igbrude said, “This is a good performance and a great result. This despite the unfavorable economic environment where the government is a competitor and sole importer of oil, coupled with a shortage of foreign exchange, kudos to them.

He noted that “to improve this performance, companies should focus more on their areas of competitive advantage such as lubricant production, diesel import, insecticide production as well as automotive service business and all another area where they can make good margins in their business operations.They also need to manage their costs effectively.

Seplat Energy CEO Roger Brown said: “Production increased strongly in the second quarter, reaching 52.4 kboepd across our operations, and we expect to maintain higher volumes for the rest of the year. year now that we plan to export liquids through the safer Amukpe-Escravos Pipeline.

“Having sold our stake in Ubima due to its high production costs and export difficulties, we recently acquired a 95% stake in the marginal Abiala field and expect to start mining there in the near future. next year using OML 40’s existing infrastructure. low-cost, low-risk upstream growth strategy we announced last year.

“We remain confident that our transformational acquisition of MPNU will be approved, adding significant reserves and production capacity that will strongly strengthen Seplat Energy’s position as Nigeria’s leading indigenous oil and gas producer.

“We recently launched a roadmap for decarbonization, with a clear path to end routine flaring by 2024. Additionally, our ‘Tree for Life’ initiative will plant five million saplings to sequester carbon in five states. All of these initiatives demonstrate our strategic commitment to building a sustainable business that delivers the energy transition for the benefit of all Nigerians.

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