NGX Oil&Gas Index Leads as Demand  Pushed Operators’ Revenue to N769.07bn in H1 2023

Kayode Tokede

The surge in fuel price and increasing global demand spurred five petroleum marketing companies listed on the Nigerian Exchange Limited (NGX) revenue to N769.07billion in half year (H1) ended June 30, 2023, an increase of 31.6 per cent from N584.34 billion reported in the corresponding period of 2022.

The listed petroleum marketing companies on thee NGX are Seplat Energy Plc, Conoil Oil Plc, TotalEnergies Marketing Nigeria Plc, Eterna Plc, and MRS Oil Nigeria Plc.

According to the National Bureau of Statistics (NBS), the average retail price paid by consumers for Premium Motor Spirit (Petrol) in June 2023 was N545.83, indicating an increase of 210.31 per cent relative to the N175.89 recorded in June 2022.

The bureau also disclosed that the average retail price for refilling a 5kg Cylinder of Liquefied Petroleum Gas (Cooking Gas) decreased by 3.56 per cent from N4,218.38 in June 2022 to N 4,068.26 June 2023.

In addition, the average retail price of Automotive Gas Oil (Diesel) paid by consumers in June 2023 was N815.83 per litre, an increase of 11.18 per cent from N733.78 per litre recorded in the corresponding month of the previous year.

Following the significant increase in petroleum products, Conoil generates N87.14billion revenue in H1 2023, an increase of 54.9 per cent from N56.25 billlion in H1 2022, while TotalEnergies Marketing Nigeria declared N274.6 billion revenue in H1 2023, a growth of 31.4 per cent from N209.01 billion in H1 2022. 

About 76.9 per cent or N211.16 billion and 23.1 per cent or N63.44 billion petroleum products and lubricants/others contributed to  TotalEnergies Marketing Nigeria revenue in the period under review.

However, MRS Nigeria declared N59.65billion revenue in H1 2023, an increase of nearly 40 per cent from N42.66 billion in H1 2022, while Seplat Petroleum reported N278.33 billion revenue in H1 2023, a growth of 27 per cent from N219.2 billion in H1 2022.

Seplat Petroleum announced N245.91 billion crude oil sales in H1 2023 from N195.16 billion as its gas sales increased to N32.43 billion in H10 2023 from N24.04 billion in H1 2022. 

In addition, Eterna reported 21.2 per cent growth in revenue to N69.34 biillion in the period under review from N57.22 billion reported in corresponding period of 2022. 

However, as a result of mounting cost of sales and operating expenses, the five firms generated N61.98 billion profit before tax, a decline of 40.5 per cent compared to N104.19 billion in H1 2022.

The five firms in the last seven months of 2023 have contributed to the NGX performance, as the NGX Oil & gas Index appreciated by 101.4 per cent to 931.42 basis points as of July 31, 2023 from 462.48 basis points the stock market opened in 2023.

The index outperformed the NGX Banking Index, NGX Industrial Goods Index, NGX Consumer Goods Index, among others on the bourse.

Among the top drivers include; Seplat Petroleum that increased to N1,693.60 per share as of July 31, 2023 from N1,100.00 per share it opened for trading in 2023. 

Also, MRS Nigeria has appreciated to N109.45 per share as of July 31, 2023, a growth of 676 per cent from N14.10 per share it closed in 2022, while Conoil’s stock on the bourse moved to N110.00 per share, a significant increase of 315.09 per cent from N26.50 per share        

Capital market analysts have attributed hike in these companies’ revenue to federal government reforms in the oil & gas sector, urging investors to take position

The Vice President, Highcap Securities Limited, Mr. David Adnori, explained to THISDAY  that the growth in the period under review was driven by increase in petroleum price, stressing that increasing business activities, also a driving factor.

 According to him, “The crude oil price per barrel in the global commodity market was low in 2020 and it affected the price of petrol. The federal government was reliant to increase the price of petrol at some time.  Investors also compensated these companies considering their stock price appreciating in seven months of 2023.

“In Q1 2022, business activities were improving post-covid and there was movement restriction that people were not travelling. In 2023, we saw the ease of movement improved activities in the transport, commercial and manufacturing sectors.

“The growth recorded in revenue by these companies has a lot to do with improvement in business activities than the hike in price of petroleum products.”

In their view, Analysts at Cordros research said: “Nigeria’s oil and gas marketers will maintain another year of positive revenue growth, driven specifically by; possible increase in PMS prices, following our expectations of a partial stoppage of PMS subsidy in June and a sustained heavy local consumption of petroleum products.”

According to them, “FG unable to fully deregulate the downstream oil and gas sector following protests by labour unions, it has continued to incur expensive subsidy payments through NNPC under-recovery costs. For 2023FY, we estimate the subsidy cost will settle at c. N3.69 trillion – H1-2023: N2.88 trillion; H2-2023: N810.00 billion.”

Capital market analyst, Mr. Rotimi Fakayejo, attributed the increase in revenue of these companies to higher-margin in crude oil products, stressing that the ease of movement also contributed to revenue and profit.

According to him, “These companies reported an increase in revenue due to higher margin in products the sale this year. The restriction of movement eroded their revenue last year but with the ease on COVID-19 lockdown, they were able to grow revenue that translates into profit.”