Six oil firms’ nine-month profits exceed N600 billion despite security concerns

•Sector gains 121% as shareholders seek sustainability policies

Despite insecurity concerns, six oil firms posted a combined profit of N626.6 billion in their nine-month operations.The six firms Seplat, Total Energies, Conoil, MRS, Aradel and Eterna achieved N626.6 billion profit before tax (PBT) in the nine months that ended September 30.

The value represents 184 per cent increase from N133 billion recorded in the corresponding period in 2023. According to their financials, the firms were able to navigate both corporate and market challenges to grow their profits.

The companies also grew their profit after tax (PAT) by N215.6 billion in their nine months of operations, up from N64.7 billion achieved in the same period of 2023.

For instance, Seplat recorded a 483 per cent increase in PBT to N366 billion from N62 billion while Total Energies announced a 151 per cent rise in PBT, from N16 billion to N41 billion in the period.

Conoil’s PBT during the period rose from N11 billion to N14, representing an increase of 30.6 per cent. MRS achieved an 89 per cent increase in PBT to N9.3 billion, higher than N4.9 billion posted in the previous year.

Also in the same period, Aradel and Eternaoil achieved a 412 per cent and 149 per cent rise in PBT from N37 billion and N2.1 billion to N191.5 billion and N5.3 billion.

The improved performance in the oil and gas companies’ operations may be attributed to the increase in price of petrol, diesel and lubricants. The development also propelled activities of its index to return over 121 per cent year-to-date gain to investors as at the close of trading on November 1.

Data from the exchange showed that the oil and gas index is currently rated best performing in the year, surpassing five other major indices of the exchange in terms of return on investment.

Still, operators said efforts by the government to revitalise the sector through the passage of the Petroleum Industry Act (PIA) into law in 2021 are yielding a meaningful result.

The PIA, enacted in 2021, aims to overhaul the petroleum sector in Nigeria. It establishes new regulatory bodies, commercialises the NNPC Limited and introduces a fresh tax system.

The act has significantly addressed tensions in host communities, introducing a community development fund. In addition, stakeholders have pointed out that the global energy transition towards renewable sources is impacting Nigeria’s oil and gas sector.

Head Equity, Planet Capital, Dr Paul Uzum, said the rise in petrol prices has increased the firms’ turnovers and profit margins. He added that Oando and Seplat’s acquisition of marginal oil fields from international oil companies also contributed to the turnaround in the performances of the firms.

“Investors are buying the stocks knowing that their profit level will leapfrog with the acquisition that is taking place in the industry,” he said.

Member of the Exceptional Shareholders Association of Nigeria, Olugbosun Ariyo, said the stellar performance of the oil and gas sector is driven by the strategic acquisitions by companies like Seplat and Oando as well as key partnerships and initiatives introduced by reforms in the sector.