Forte Oil Plc has revealed plans to sell some of its upstream and power segments in Nigeria.
According to Reuters, the company will divest from its Ghana operations and strategically focus more on its core operation in Nigeria which is fuel distribution.
The operations in Ghana has declared losses over the last three years and has uncollectible trade debts due to tough economic conditions and a currency devaluation.
Recall that Forte Oil had in 2013 through its subsidiary Amperion Power Distribution Company acquired the Geregu Power Plant in Kogi state under the privatization exercise carried out by the Bureau of Public Enterprise.
Figures from its recently released Q1 2018 financial result for the first quarter ended 31st March shows an 18% surge in revenue from ₦33 billion recorded in Q1 2017 to ₦39 billion in 2018.
A breakdown of the revenue from its operating segments show that the fuel segment which is responsible for the sale of petroleum products and Aviation Turbine Kerosine recorded the highest revenue of ₦25 billion during Q1 2018 against ₦22 billion in Q1 2018 while the power generation segment recorded ₦10 billion in Q1 2018 as against ₦6 billion recorded in Q1 2017.
Forte Oil’s share price also plummeted 49 percent last year after it struggled to access forex to import products. It now has a total market value of ₦57.3 billion.
Its share price is currently flat and trading at ₦45.20 as at close of trading yesterday on the floor of the stock exchange.
What this sale means for the company.
After the approval by shareholders on May 23, the funds will be used to expand and strengthen its fuel distribution operations across the country including the construction of storage infrastructure.
The company 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 will also leverage on the anticipated full deregulation of the petroleum industry which had operated under a tightly regulated fixed margin.
Forte Oil Plc was incorporated on 11 December 1964 as British Petroleum. It became African Petroleum through the nationalization policy of the Federal Government of Nigeria in 1979.
The Company changed its name to Forte Oil Plc in December 2010 upon restructuring and rebranding. Forte Upstream Services Limited, AP Oil, and Ghana Limited are wholly owned by Forte Oil Plc
It owns 57 percent of Amperion Power Distribution Company Limited. While Amperion Power Distribution Company Limited owns 51% of Geregu Power Plc.