Prince Okafor with Agency Report
Forte Oil Plc has disclosed plans to sell its upstream services and power businesses in Nigeria and divest from Ghana in order to focus on its core fuel distribution operation in the country.
A post by Reuters quoted Forte Oil as saying that proceeds from the divestment would be used to expand its downstream fuel distribution business and also invest in storage infrastructure.
“The changing landscape in the oil and gas sector suggests backward integration would be essential to remain competitive within the sector, particularly in the face of impending deregulation,” the company said in a notice to its investors.
“Currently, Forte Oil has two storage depots, five aviation fuel depots and a lubricant blending plant. It also has 100 trucks for distribution of products across its more than 500 retail outlets, which would require a lot of capital to expand. “The company operates majorly in the downstream sector of the Nigeria’s oil and gas industry, but has diversified its businesses into other sectors of the energy value chain.
“Its 57 percent owned power unit, Amperion Power Distribution Company, has a lot of receivables due from the state-backed offtaker and its upstream unit has contributed less than seven percent to group earnings over the past three years.
“The unit in Ghana has declared losses over the last three years and has collectible trade debts due to tough economic conditions and a currency devaluation in the cocoa-rich country,” Reuters said in the post.
The company’s interest costs attributable to the businesses to be sold stood at N2.2 billion as at December, 2017. It now plans to seek shareholders’ approval for the sale on May 23 and appoint advisers, the company said in a notice to its investors.
The company recorded N2.963 billion in profit after tax for the first quarter ended March 31, 2018. The first to file in its first quarter result for 2018 on the Nigerian Stock Exchange (NSE).
The company’s profit after tax went up by 57.27 per cent from N1.884 billion in the first quarter of 2017. Its revenue under the period review grew by 20.63 per cent to N39.81 billion from N33.003 billion in 2017, cost of sales gained by 21.36 per cent to N33.01 billion from N27.2 billion in the corresponding period of 2017, while gross profit rose to N6.8 billion as against N5.8 billion in 2017.