Nigeria: Major oil companies see drop in revenue

Some major oil and gas companies listed on the Nigerian Stock Exchange (NSE) including Seplat, Total, and 11 Plc (Mobil) are continuing to feel the effects of the global coronavirus pandemic as their half-year financial statements for the year 2020 show. Collectively, the companies’ revenue plunged by N85.2 billion in the first six months of the year, according to financial data sourced from the NSE.

Following the International Energy Agency (IEA) prediction that the global oil demand would further decline in 2020 due to the spread of COVID-19 that constrained travel as well as other economic activities, the half-year financial results from the companies show a significant dip in revenue as a result of the waned appetite for products such as fuel, diesel, and lubricants.

Seplat Petroleum Development Company (SEPLAT), an independent indigenous Nigerian upstream exploration and production company listed on both the London and Nigerian stock exchanges, suffered a revenue dip by as much as 34.2% y/y to N80.1bn ($233.5m) in H1 2020 from N108.9bn ($355.1m) in H1 2019, “due to lower crude and gas prices as well as lower demand for oil and gas,” according to the company’s financial statement.

The company’s gross profit margin slumped by 81.8% y/y to N12.9bn ($37.7m) in the first six months of 2020 from N63.5bn ($207.0m) the year before, on accelerated cost of sales which rose to 32.3% y/y to $195.9m.

Despite an unimpressive half-year result, Seplat said its outlook for 2020 remains confident of market recovery in the coming months, as the “business is hedged against low oil prices using put options and a significant proportion of our revenues now come from gas, which offers additional protection from oil price volatility,” adding: “Seplat has been tested in previous adverse conditions, including a lengthy shut-in, and we are confident that the stronger and more diverse business we operate today will be even more resilient against the unprecedented market events of 2020.”

Source: theafricareport

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