At 157.56% Return YtD, Oil/Gas Emerge Best Performing Index on NGX

Kayode Tokede  

The Nigerian Exchange Limited’s Oil & Gas Index is positioned to lead the Banking, Consumer Goods among other indices as the best performing indicator on the local bourse in 2024.

The sectors’ performance in 2024 was boosted by the reforms in the Oil & Gas sector in Nigeria headlined by the removal of petroleum subsidy.

THISDAY analysis of trading numbers showed that the sector Index closed December 13, 2024 with a return of 157.56 per cent in its Year-till-Date (YtD) performance, far beyond the overall stock market return that closed the period under review at 32.9 per cent.

The companies in the NGX Oil & Gas Index are: Seplat Energy Plc, Conoil Plc, Eterna Plc, Totalenergies Marketing Nigeria Plc and Japaul Gold & Ventures Plc. 

The companies have recorded significant growth in stock price amid federal government reforms in recent years to stimulate growth, increase transparency, and attract investment in the oil and gas sector.

These reforms are aimed at enhancing operational efficiencies, increasing local participation, and encouraging a shift toward cleaner energy practices.

Part of the reforms include: Petroleum Industry Act (PIA), deregulation of the downstream sector, gas infrastructure development and promotion, ease of doing business initiatives, among others. 

Further analysis by THISDAY showed that stock price of Seplat Energy closed December 13, 2024 at N5,700 per share, gaining 147 per cent YtD from N2,310.00 per share it opened for trading this year.

The stock price of Conoil closed December  13, 2024 at N387.20 per share, an increase of 361.5 per cent YtD growth from N83.90per share the stock opened this year for trading, while Eterna closed the period under review at N22.25 per share, representing an increase of 60.65 per cent fro N13.85 per share the stock opened 2024 for trading. 

Totalenergies Marketing Nigeria listed among the NGX Oil  & Gas stock  hits N673.9 per share, representing 75 per cent YtD growth from N385 per share it closed for trading in 2023.

In addition, Japaul Gold & Ventures closed the period under review at N2.20 per share, about 29.4 per cent increase fro N1.70 per share. 

The likes of Oando Plc has appreciated  by 556.2 per cent to close Decemmber  13, 2024 at N68.90 per share from N10.50 per share while, MRS OIl Nigeria stood at N132 per share, up by 25.7 per cent YtD from N105 per share the stock opened for trading this year.  

Amid significant increase in price of Premium Motor Spirit/ Petrol, among other products, a total of six listed oil & Gas companies on the NGX generated an estimated N626.3 billion profit before tax in nine months of 2024.

This is about 384 per cent increase from N129.43 billion reported in nine months of 2023. 

From the unaudited nine months ended September 30, 2024, Seplat Energy declared N366.7 billion profit before tax, about 483.4 per cent increase from N62.85 billion reported in corresponding period of 2023, while Aradel Holdings, a newly listed oil & gas company posted N191.5 billion profit before tax in nine months of 2024, about 412 per cent increase from N37.37billion reported in nine months of 2023.

As Total announced N41.85 billion profit before tax in nine months of 2024, up by 151.8 per cent from N16.62 billion reported in nine months o 2023, Conoil declared N15.24 billion profit before tax in nine months of 2024, representing an increase of 38 per cent from N11.05 billion in nine months of 2023. 

In addition, MRS reported N9.37billion profit before tax in nine months of 2024, 89 per cent growth from N4.96 billion in nine months of 2023, while Eterna migrated from a loss of N3.4billion in nine months of 2023 to N1.68billion in nine months of 2024. 

However, the oil & gas companies have benefited from these FG reforms and increase revenue in the period under review.

In terms of revenue, Seplat Energy, and five others generated N2.97 trillion in the period under review, representing an increase of 115 per cent increase from N1.39 trillion generated in corresponding period of 2023. 

The growth in revenue is coming at a time price of Premium Motor Spirit (Petrol), among other products have increased significantly.

According to National Bureau of Statistics (NBS), the average retail price paid by consumers for PMS for September 2024 was N1030.46, indicating a 64.55 per cent increase compared to the value recorded in September 2023 (N626.21).

NBS also revealed that the average retail price of Automotive Gas Oil (Diesel) paid by consumers increased by 59.28 per cent on a year-on-year basis from a lower cost of N890.80 per liter recorded in the corresponding month of last year (i.e., September 2023) to a higher cost of N1418.83 per liter in September 2024.

“The average retail price for refilling a 5kg Cylinder of Liquefied Petroleum Gas (Cooking Gas) increased by 4.19per cent on a month-on-month basis from N6,430.02 recorded in August 2024 to N6,699.63 in September 2024. On a year-on year basis, this increased by 59.90per cent from N4,189.96 in September 2023,” NBS added.

Also, the reforms in the oil & gas sector reflected on stock prices and corporate earnings of listed oil & gas companies on the exchange amid foreign exchange losses.

Analysts have attributed the hike in these companies’ stock prices to FG reforms in the oil & gas sector, urging investors to take positions in companies with fundamentals.

Speaking, the Chief Operating Officer of InvestData Consulting Limited, Mr Ambrose Omordion, attributed the increase in revenue of these companies to higher-margin 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 they sold this year. The reforms in the oil & gas sector have impacted on revenue that translates into profit.”

On his part, the Vice President, Highcap Securities Limited, Mr. David Adnori, told 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 on increasing the price of petrol at some time.  Investors also compensated these companies considering their stock price appreciating so far in 2024. 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.”