It's a good time to be an oil company, as long as you are not in Nigeria
Seplat Q3 2022, Stears

Life comes at you fast in Nigeria. Or are the natural laws of order accelerated here?

Take the oil and gas sector, for example. Oil and gas companies and countries are making more money than they’ve made in decades. For most, it’s more than they’ve ever made, period. In Q2, Shell made over $11 billion in profits, its best quarter ever, and Oman is set to record an annual budget surplus worth 6.5% of its total gross domestic product (GDP). But Nigeria is the exception.


Key takeaways

  1. Despite a strong performance in Q1 2022, Nigeria’s oil and gas sector issues have finally caught up with Seplat as the company recorded a net loss in Q3 2022.

  2. While Nigeria’s oil and gas sector is declining due to theft, the global oil and gas economy is experiencing a record-breaking year as prices have averaged over $100 per barrel.

  3. Unfortunately, investor sentiment towards Seplat has turned sour even as foreign investors flee from the Nigerian economy and its mind-boggling fiscal woes.


A few months ago, I wrote an article titled “Why investors are bullish on Seplat” based on the company’s Q1 financial performance. In Q1 2022, Seplat recorded a 58.6% increase in revenues and a 130% increase in operating profit, with $35 million profit before tax, more than triple Q1 2021 numbers. This performance was driven by high prices despite the company’s lower production volumes in Q1 2022 due to oil theft. Seplat was flying high on the Nigerian stock exchange with a share price of ₦1,290, up 98% from Q1 2021. The verdict from investors and analysts was “buy, buy, buy”, and we were all bullish (ps: this is not investment advice).

Two quarters later, I’ll be the first to admit that my article did not age well. Even though oil and gas prices are still high, Seplat recorded a net loss of about $10 million. Worse still, its credit rating has been downgraded by Moody’s, an international credit rating agency. This sends a clear signal to investors and analysts: “sell, sell, sell”. One minute, you’re the darling of the NGX, and the next, investors are dumping your shares faster than you can say, “Seplat!” Indeed, the stock market is a fairweather friend. So, what went wrong?

Today, we will explore

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Noelle Okwedy

Noelle Okwedy

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