- Mercuria, one of the largest integrated energy and commodity trading companies in the world, is in advanced talks to buy a 17 percent stake, worth over $200 million in Forte Oil.
- Forte Oil stock price, which has bucked by the recent selloff in Nigerian equities, is up 25 percent in the past month, with its market capitalisation rising by N76 billion to N323.6 billion.
- The Nigerian Stock Exchange (NSE) All Share Index (ASI) is down -0.07 percent over the same period to September 1.
“Forte Oil has a small float so any positive chatter usually makes the stock fly,” Abiodun Keripe, Head of Research at Elixir Investment Partners Limited, said.
- Commodity traders including, Mercuria, Vitol and Trafigura Beheer BV are targeting fuel storage and retail businesses in Africa, Europe and Australia to complement their crude and oil product-trading operations.
- Vitol Group and private-equity firm Helios Investment Partners in June 2015, agreed to buy a majority stake in Oando plc’s service station, fuel storage and supply business in West Africa for $276 million.
- The Forte Oil’s transaction would further Mercuria’s goal of becoming a more vertically integrated business model amid increasing competition.
- Mercuria and other commodity traders are enjoying the best trading conditions in more than four years amid increased volatility and as a slump in crude cuts financing costs. Companies are generating higher returns by storing cheap oil today to sell it at higher prices later, a market structure known as contango.