Economy
Worry as Forte Oil Loses 40.26% Barely a Month After Otedola’s Exit
By Dipo Olowookere
The continued dwindling in the fortunes of shares of a once vibrant energy company, Forte Oil Plc, is giving its holders something to seriously worry about.
Last month, billionaire Nigerian businessman, Mr Femi Otedola, announced his exit from the firm after offloading his 75 percent stake to focus on another business venture, Geregu Power.
After his exit from the firm, there was a change in almost the entire management team of Forte Oil.
The oil and gas mogul, while he was announcing his departure from the company, had wished the new owners well, challenging them to take the firm to enviable heights.
“A few years ago, my team and I embarked on an arduous task of transforming a moribund petroleum marketing business, African Petroleum Plc (formerly British Petroleum) into Forte Oil Plc; a leading integrated solutions provider with solid footprints in downstream petroleum marketing, Upstream Services and Power Generation and one in which we built intrinsic value to the benefits of our shareholders.
“In line with my principle of business focus, we have divested from our marketing and upstream businesses and shall from now on focus and consolidate on the gains of our power generation business, Geregu Power Plc.
But since this announcement on Wednesday, June 19, 2019, Business Post observed that Forte Oil shares have lost 40.26 percent at the stock market.
When Mr Otedola left Forte Oil last month, shares of the company were traded at the nation’s stock exchange at N34.65k per unit.
However, at the close of business on Friday, July 12, 2019, they were transacted at N20.70k each, indicating a decline of 40.26 percent or N13.95k.
This huge fall in less than a month is already making some shareholders of the firm to begin to doubt the future of the company.
They wondered why things have been on a free-fall since the departure of Mr Otedola, with insinuations that the businessman might have seen this coming and decided to speak to his legs.
But at the weekend, a source at Forte Oil informed Business Post that though the management and board of the company are greatly concerned by the performance of the firm at the stock market, they are working tirelessly to ensure things change for the better.
“Don’t think the board and management are doing nothing to make things better because this is their main agenda for now. You will begin to see positive changes.
“Remember, they just came on board and they need time to settle down. I can assure you that Forte Oil will bounce back,” the source, who profusely begged not to be named, told Business Post.
Recall that after taking over as the new Managing Director and Chief Executive Officer of Forte Oil Plc, Mr Olu Adeosun, urged shareholders of the energy firm not to offload their shares because better days were staring at them.
He gave this assurance while addressing newsmen in Lagos, saying the new owners of the company have big plans for the company and its shareholders.
According to him, “Our desire for our shareholders is the same as for our customers. We don’t want anyone to go. We want our shareholders to hold on to their shares because we believe, as a long term company, there is better value in the long term and we will return dividends to them.”
He had stressed that the new team plans to consolidate the achievements of the previous management and take advantage of the combined assets at its disposal to improve stakeholders’ wealth and ensures best quality service delivery to its numerous, boasting that Forte Oil Plc will be one of the best things to have happened in this country.
“This is because of the symbiotic strength we are bringing to the sector. It is a very complementary process. The core investors have a wide experience and strength in the upstream with massive exposure to the international trading market; they have a deep trading line with their bankers. They are bulk traders and they are bringing in products.
“Forte Oil has the third largest retail outlets in Nigeria. We are not buying from intermediaries again but we are buying directly from the bulk traders where other intermediaries are buying from.
“We will enjoy the benefits of economies of scale; we will enjoy the benefits of credit and also enjoy the benefits of the diversity of assets that Prudent Energy is bringing to the party,” he had told journalists last month.
Also recall that after its acquisition of Forte Oil, Chairman of Ignite and Chief Executive of Prudent Energy Services Limited, Mr Abdulwasiu Sowami, had said the investment was a of “strategic importance to support our quest of continuously adding value to the Nigerian oil and gas industry.”
According to him, “The next phase of Forte Oil’s growth will focus on increasing volumes, diversifying business operations, widening distribution networks and extracting potential synergies with partners. We look forward to working as part of the Forte Oil family to achieve this growth.”
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange extended its stay in the south for the fourth consecutive session after it shed 1.18 per cent on Friday, March 13.
The unlisted securities market recorded a loss despite closing without a price decliner, and ending with two price gainers led by Geo Fluids Plc, which gained 1o Kobo to sell at N3.10 per share compared with the previous day’s N3.00 per share. Industrial and General Insurance (IGI) Plc appreciated during the session by 2 Kobo to trade at 54 Kobo per unit versus Thursday’s closing price of 52 Kobo per unit.
When the market closed for the day, the market capitalisation lost N29.83 billion to close at N2.489 trillion compared with the N2.519 trillion it finished a day earlier, and the NASD Unlisted Security Index (NSI) crashed by 49.84 points to 4,160.46 points from 4,210.31 points.
Market activity improved yesterday, as the volume of transactions rose 179.5 per cent to 10.4 million units from 3.7 million units, but the value of trades declined by 68.4 per cent to N29.9 million from N95.0 million, while the number of deals weakened by 11.5 per cent to 46 deals from 52 deals.
Central Securities Clearing Systems (CSCS) Plc remained the most active stock by value on a year-to-date basis with 38.4 million units worth N2.4 billion, Okitipupa Plc followed with 6.4 million units traded at N1.1 billion, and FrieslandCampina Wamco Nigeria Plc transacted 6.3 million units for N584.3 million.
Resourcery Plc ended the trading session as the most traded stock by volume on a year-to-date basis with 1.1 billion units valued at N415.6 million, trailed by Geo-Fluids Plc with 130.8 million units valued at N504.5 million, and CSCS Plc with 38.4 million units worth N2.4 billion.
By Adedapo Adesanya
The Naira continued to claw back some gains against the Dollar in the different segments of the foreign exchange (FX) market, as its value was strengthened on Friday.
In the black market, it gained N10 against the United States Dollar yesterday to close at N1,400/$1 compared with the preceding day’s rate of N1,410/$1, and at the GTBank forex counter, it chalked up N6 to close at N1,385/$1, in contrast to the N1,391/$1 it was traded a day earlier.
Similarly, in the Nigerian Autonomous Foreign Exchange Market (NAFEX), it appreciated against the greenback during the session by N5.28 or 0.38 per cent to quote at N1,366.23/$1 versus Thursday’s closing price of N1,371.51/$1.
It also improved its value against the Pound Sterling in the official market on Friday by N21.81 to settle at N1,812.99/£1 compared with the previous day’s N1,834.80/£1, and gained N13.86 against the Euro to sell at N1,568.03/€1 versus N1,581.89/€1.
Pressure eased further on the FX market as the Central Bank of Nigeria (CBN) continued interventionist operations this week, selling Dollars to banks to boost liquidity after a $500 million boost last week.
This was complemented by inflows from foreign investors, exporters and non-bank corporates, among others, while Nigeria’s gross external reserves remained above $50 billion, the highest since 2009.
The Governor of the apex bank, Mr Yemi Cardoso, also eased fears of a Naira devaluation, saying the country’s financial system has been strengthened by reforms.
Regardless, external pressure looms as the US Dollar strengthened globally due to its war with Iran, now ongoing for three weeks.
Meanwhile, the cryptocurrency market was largely down as traders and investors continue to align with current realities.
The market is adapting to the conflict in real time. Early in the war, every headline produced an outsized reaction because nobody could price the tail risk. Now, traders have a framework where strikes happen, oil spikes and bitcoin dips only to recover again.
Cardano (ADA) depreciated by 3.8 per cent to $0.2623, Dogecoin (DOGE) lost 1.7 per cent to finish at $0.0948, Ripple (XRP) slumped 1.5 per cent to $1.39, Solana (SOL) dropped 1.4 per cent to sell for $87.33, Binance Coin (BNB) went down by 1.3 per cent to $653.58, Bitcoin (BTC) declined by 1.1 per cent to $70,670.63, and Ethereum (ETH) decreased by 0.9 per cent to $2,078.78.
However, TRON (TRX) appreciated by 1.7 per cent to $0.2941, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 apiece.
By Adedapo Adesanya
The price of the major crude oil grade, Brent crude oil, closed above $100 on Friday for the second consecutive session, as the Iran war heads toward its third week, with oil tanker traffic through the Strait of Hormuz still effectively at a standstill.
It gained 2.67 per cent or $2.68 during the trading day to close at $103.14 per barrel, while the US West Texas Intermediate (WTI) crude oil grade appreciated by 3.11 per cent or $2.98 to settle at $98.71 per barrel.
Brent futures were up about 10 per cent for the week following the 27 per cent rise seen last week, which marked the biggest weekly gain in oil prices since the COVID-19 pandemic in 2020. WTI futures, which saw their best week since 1983 last week, ended the week more than 8 per cent higher.
US President Donald Trump said American forces launched a major bombing raid on Iran’s strategic Kharg Island, targeting military facilities on the key Persian Gulf outpost while warning Iran that its vital oil infrastructure could be destroyed if shipping in the Strait of Hormuz is disrupted.
The terminal accounts for roughly 90 per cent of Iranian crude shipments, loading millions of barrels per day onto tankers bound largely for Asian markets.
The US and Israel’s strikes in the conflict have largely targeted Iranian military and nuclear infrastructure. Oil facilities elsewhere in Iran have been hit, but Kharg’s massive storage tanks, jetties, and pipelines had remained untouched until the latest strike.
Iran’s new supreme leader, Mojtaba Khamenei, vowed to keep fighting in a message delivered via state television.
There have been a number of attacks on foreign ships in or near the Strait, feeding into concerns that a prolonged war could translate to a global economic shock.
Prices are rising despite the US and its allies rolling out some measures to keep a lid on energy costs.
The International Energy Agency (IEA) has agreed to release 400 million stockpiled barrels, the largest such action in history.
The US has issued a 30-day waiver for India to purchase sanctioned oil from Russia. President Donald Trump is considering loosening rules under the Jones Act that require American ships to transport goods between domestic ports, including oil and gas, in an effort to lower costs.
Traders are continuing to monitor developments in the Middle East.
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