Oil companies operating in Nigeria have come under serious financial challenges due to the volatility in the global oil market, which has impacted on their operations and profitability.
Some of them are now slashing staff salaries, while others have either put on hold or reduced the quantum of investments in the country, LEADERSHIP findings have revealed.
Reliable sources in the sector told LEADERSHIP that fluctuations in the sector have led to a situation where some of the companies have slashed workers' salaries by 50 per cent.
One of the firms, New Cross Petroleum Limited, a Lagos-based indigenous oil and gas company announced a 50 per cent pay cut for its workers recently.
The management of the company, in an email correspondence to its staff, said the 50 per cent salary slash would be for six months in the first instance.
A senior staff of the company who confirmed the development to LEADERSHIP, on the condition of anonymity as he was not permitted to speak on the issue, said the new salary regime is expected to take effect from this month.
"We are obviously not happy with the development but we are discussing with the management and since the month is yet to end, we do not know if they will reconsider," he said.
Deregulation of products business in Nigeria which was expected to remove restriction to sales, the devaluation of the naira, scarcity of dollar, increasing vandalism in the Niger Delta among others ensured that most operators in the downstream and upstream sectors experienced profit decline in the first half of the year.
Available data showed that quoted firms in the Nigerian Oil and Gas Sector recorded 18 per cent losses after tax for the half year period ended June 30th 2016 at N23.594 billion from N19.974 billion in the same period in 2015.
Specifically, a review of 10 companies listed under the oil and gas sector of the Nigerian Stock Exchange revealed that losses incurred by four of them outweighed the profit garnered by the remaining six.
The companies with losses for the half year period under review are Oando Plc, Seplat Petroleum Development Company Plc, Capital Oil and Japaul Oil Plc. These companies posted a combined loss of N42.1 billion, compared to N18.5 billion profit made as at June 2016 by the other six companies namely Conoil Plc, Total Nigeria Plc, Eterna Oil Plc, Forte Oil Plc, Mobil Nigeria Plc and MRS Oil Plc.
While Oando reduced its losses of N35.014 billion incurred in June 2015 by 22.9 percent to settle at a loss of N26.991 billion, Capital Oil reduced its losses by 88.6 percent to a loss of N6.530 million from N57.359 million posted in the prior year. Seplat on its part recorded a loss of N12.808 billion falling 56.8 percent from a profit of N8.169 billion made in the corresponding period of 2015, while Japaul Oil's losses increased 19.9 percent to N2.301 billion in June 2016 from N1.919 billion in the same period of 2015.
On the other hand, MRS Oil Plc recorded the highest profit growth, climbing 2,319 percent in one year after a profit of N909.7 million in June 2016 from N37.6 million profit in June 2015, this was followed by Total Nigeria Plc that grew its 2016 half year profit of N8.934 billion by 270.6 percent from N2.411 billion. Conoil Plc came third with a 190 percent growth in post-tax profit of N1.042 billion from N359.413 million in June 2015, while Eterna Oil Plc profit after tax appreciated 63.4 percent to N977.5 million from N598.3 million.
Mobil Nigeria Plc's profit also increased 52 per cent to N4.416 billion from N2.910 billion and Forte Oil Plc posted a profit of N2.233 billion, 11.8 per cent lower than N2.530 billion in June 2015.
A further analysis on the performance of the oil and gas sector stocks showed that Total Nigeria Plc's stocks recorded the highest year to date (ytd) returns of 88.99 per cent, Eterna Oil Plc followed with a ytd return of 71 per cent, Conoil Plc came third with a ytd return of 57 per cent. Seplat and Mobil yielded 28 and 24 percent ytd returns respectively while Capital Oil and Japaul Oil were flat.
Oando, Forte Oil and MRS Oil recorded a negative ytd return of 44 per cent, 32 per cent and 21 per cent respectively.
However, in spite of the nation's foreign exchange volatility and lower oil price, these companies' revenue for the period under review increased 14 per cent from N492.8 billion to N560.7 billion with a significant portion contributed by the sale of lubricants and other petroleum products sold and distributed by these oil companies nationwide.
When contacted, spokesperson for Royal Dutch oil giant Shell, Mr. Precious Okolobo declined comment.
Sola Adebanwo, of Chevron however asked our correspondent to send the inquiry to his mail to enable him treat the request but did not respond at the time of filling the story
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