The Guardian
Email YouTube Facebook Instagram Twitter WhatsApp

Forte Oil unveils growth plans for sustainable operations


Forte Oil

Forte Oil Plc, at the weekend, unveiled a strategic growth plan aimed at enhancing business profitability and increasing its market share in the industry.

Part of the plan, according to the Group Executive Director, Finance and Risk Management, Julius Omodayo-Owotuga, is to deepen its focus on high margin products such as lubricants, Liquefied Petroleum Gas (LPG), and power to drive revenue generation.

Omodayo-Owotuga, who spoke at a press briefing in Lagos, said: “We grew the lubricants business by 62 per cent in 2016, to 21 million litres from 13 million litres recorded in 2015.”

Another area of focus, according to him, is to strengthen the company’s balance sheet through enhancement of working capital and efficient management of inventory and trade account receivables.

“The company is moving its plans towards the acquisition of the right upstream assets at the right price to increase volume and margins.”

Furthermore, he added that the firm would focus on mergers and acquisitions within the industry to increase its downstream business by looking at becoming offtakers in refineries in the next six months.”

He said Forte Oil would optimise distribution channels as well as partner with telecommunication firms and financial institutions for effective distribution of its products.

Speaking on the fund raising, he explained that the firm is currently wooing foreign investors in its proposed N20 billion fresh capital raising the exercise for the expansion of its operations.

According to him, there are lots of foreign interest in the shares of the company, which he attributed to its diversification strategy; operating in the downstream, upstream and power sectors of the Nigerian economy.

He explained that the firm has approached the Securities and Exchange Commission (SEC), and the Nigerian Stock Exchange (NSE), to seek approval for the proposed N20 billion fresh fund raising.

“We said to ourselves, because of the margin in downstream business, we cannot continue to use only debt; we have to bring in additional equity and we have started the process. We have approached SEC and the NSE, the Group Chief Executive Officer is meeting with some investors outside the country in respect to our N20 billion capital raising.

“The company had in November 2016, announced it successfully raised N9 billion from a bond offering, which will be used to refinance existing short term bank loans and fund retail outlet expansion.

“With the raising of this initial capital, which has been fully underwritten shows the confidence the investing public has in Forte Oil Plc as an investment of choice.”

He said the N9 billion five-year bond is the first tranche of a proposed N50 billion bond issuance programme, which proceeds of the Series 1, will be deployed to refinance existing short term commercial bank loan obligations, and to expand downstream retail outlet footprints amongst others.

Omodayo-Owotuga pointed out that the proceeds from the N20 billion fresh capital will be used to enhance Forte Oil’s working capital, business expansion and downstream businesses.

He added that company shareholders had earlier issued a mandate to raise fresh funds of up to N100 billion; out of which N9 billion has only been raised.

The Manager, Investor and Government relations, Doyin Ogun, said in terms of revenue contribution to the operations in 2016, the upstream business has contributed 1.5 per cent, power nine per cent, even as the downstream 89.9 per cent to the overall operations.

“In terms of gross profit, power has contributed 20 per cent, upstream five per cent, and the downstream contributed 75 per cent,” he said.

Receive News Alerts on Whatsapp: +2348136370421

No comments yet