Forte Oil hits 3year high on improving earnings, growth prospect

After three years of consecutive losses, Forte Oil Plc, formerly known as African Petroleum Plc (AP), has bounced back with impressive earnings that raise the hope of existing and prospective investors in the market.

Beside improved first and second quarter financial results for the fiscal year, the current third quarter earnings shows that the storm might be over for the oil marketing company.

Still basking in euphoria of the just commissioned 414 Mega Watts Geregu Power Generating Plant in Kogi State, the company has been able to sustain its growth path by recording 317.99 percent increase in profit after tax which amounts to N2.737 billion for third quarter ended September 30, 2013 compared to N656.396 million posted same period in 2012. Current earnings per share stood at 2.54 kobo which is above 0.61 kobo reported in 2012.

Its unaudited financial statement shows that revenue went up by 28.97 percent to N92.125 billion compared to N71.429 billion recorded same period in 2012.

In his highlight of the consolidated statement of comprehensive income, Group Chief Financial Officer Julius Omodayo-Owotuga explained that focus on its business transformation programme which includes strategic retail expansion, growing of its commercial customer base and non fuel revenue activities contributed to the nine months performance.

According to him increased revenue from the sale of refined petroleum products, such as Premium Motor Spirit (PMS or petrol), Automotive Gas Oil (AGO or Diesel), Aviation Turbine Kerosene (ATK) and Premium Quality Grade Lubricants are the key drivers of the unaudited third quarter financial account for the period ended September 30, 2013.

The periods in which Forte Oil incurred losses was as a result of the suspension of imports under the subsidy regime, but were able to sustain business operation through sales of lubricants and income from non fuel activities, before they commenced imports in last quarter of 2012.

With increasing growth potentials of the company, the share price of Forte Oil that was selling at N14 six months ago, has jumped to about N74.55 kobo at the close of trading last Friday.

For market watchers this is not a surprise because in the market boom that preceded the crash in 2008 / 2009, the stock traded for about N300 per share.

The new management led by Akin Akinfemiwa believe that despite challenging environment in the midstream, its subsidiary African Petroleum Oilfield Services Limited (APOS) will continue to make progress in the supply of production chemicals, drilling fluids and completion fluids to International Oil Companies in the upstream sector with the likes of Shell, Addax, ExxonMobil, Total and emerging local oil companies such as Afren, Septa and Geo Mud.

Consolidating on this, the company said it has entered into an agreement with SNEPCO to execute a completion fluids contract for one year, while they are currently executing a two year multimillion dollar contract with another leading international oil company for the supply of laboratory services and wellborn clean up fluids. Akinfemiwa believed that the contract will be renewed after the initial term as a result of the satisfactory performance from previous transactions’ with the IOCs.

He pointed out that APOS is also working towards actualizing the Nigerian local content policy through the establishment of a production chemicals and drilling fluids facilities by bringing local technology to the shores of Nigeria. Other business potentials for the company are in the upstream petroleum sector, in which they are identifying opportunities’ in the sale of assets by IOCs through partnership with established companies and also participating in any future federal government oil bid round.