In the past few days, Forte Oil Plc has been a major subject of discussion among Nigerian business stakeholders and investors. This is due to the company’s recent acquisition by Prudent Energy Services Ltd.
In view of this development, Nairametrics, alongside some other selected media outlets, were invited for an interactive session with the company’s newly-appointed Chief Executive Officer, Olumide Adeosun.
In the course of the session, Adeosun gave detailed information about the company’s future plans. He also used the occasion to allay the fears of the company’s minority shareholders who may be wondering what is in store for them following the acquisition.
Note that this is Adeosun’s first media briefing since he assumed his current position as the Chief Executive Officer of Forte Oil Plc.
Interview Excerpts:
Can you describe the company’s mode of operation since its establishment?
It is purely a downstream company. If you get back to its formation in December 1964, that was precisely what it was. Over the past decades, the company has built on that heritage through various stages and phases of our products, and I believe that the company. It has been an interesting journey for the company, in its asset base, people, culture, systems, and structure.
So, its been there, it does exactly what you will expect it to do. The company supplies, and trades in multiple streams; including lubricants.
In terms of corporate values, the values are exactly what you would expect from a company of this large size. We are committed to our customers, the people, and in knowing the system.
Why was Forte Oil acquired?
It is important to understand that this company was built for over 65 years. We have looked at what it will take to grow a business like this from scratch. Prudent has something mentioned and we looked at what it will take to move to 430 stations, e.t.c. And then we realised that it will take another leap of time; the market price, the share price, plus the premium that was loaded on it.
I’m sure if you speak to the co-investor, he will tell you that it’s a pretty good value, around 64 billion. This is because if you try to organically assemble this today, it will be quite the task. So, I think we did well.
[READ MORE: What next for Forte Oil Plc following Prudent Energy’s takeover?]
What are your plans for the minority shareholders?
Our message for the minority shareholders of Forte Oil Plc is that we are growing a sustainable business here. We would like everyone who holds a share as a shareholder in this company to retain his or her shares; the shares are not going anywhere. The company hasn’t gone anywhere in over 65 years and we do not think it’s going anywhere in the next 65 years.
Our desire is that people who are shareholders in this company continue to be stockholders in this company, and bear from the dividend we hope to disburse over time.
In order to make this commitment sustainable, we have put together a strong board. The board is blessed with seasoned industry professionals. Amongst those that seat on the company’s board are people who are not just in our core purpose but also in related business along the value chain.
What do you plan to do with the existing brand?
As you know, the name Forte Oil is actually personal to an individual and that individual was the co-investor that has sold his shares. It is likely he won’t hold it against us to rebrand.
It is very likely to rebrand somewhere down the line in terms of priority, and how we will like to run things. Although, it’s not a day’s activity, it’s something that is being considered in a strategic way.
What does the acquisition represent?
At this particular point in time, I believe that this particular co-investor is one of the best and most important things to happen to this company because there is this very symbiotic marriage between two companies that have very complimentary processes.
Forte Oil’s upstream has massive exposure to the international trading market, and also has deep funds for its bankers as trading partners. So if you bring in the products. Forte oil easily has the third largest chain of retail outlet, so what that does is that it gives us at Prudent, the opportunity to provide Forte Oil with a much more simplified supply of valued chain and now we’re not buying through intermediaries, we are buying directly.
In view of this, we are enjoying the benefits of credit or credit lines that Prudent itself is giving and you’re also getting the benefit of the diversity of assets that Prudent brings to the party.
Forte Oil has assets, and Prudent has complementary assets. We have a large terminal in Apapa, and a large terminal in the South-South. What that does is that it creates the means for us to move faster to the north and to the south.
What is the new phase of the company’s business after this acquisition?
With the pre-divestment that happened, the management of Forte Oil will have assets to some retain. This will conduct working capital and we will do some of the things which were not possible in the past, due to some constraints. But the divestments of all the other businesses are stripping this down to its core.
Secondly, Prudent means business by one thing, it’s an industry of margins, narrow margins. We have figured out how to pump products from a source in the most efficient way possible. In this regard, a lot of learning will flow down in terms of increasing the operations and efficiency of the company.
What’s your strategic focus for the next phase? We are going to focus on significant things, which are giving our people the right talent, giving them access to other opportunities like synergies.
As we will look to diversify products, there’s an opportunity for people to move across Prudent.
We also want to prioritise our customers. We get our people happy first, then we focus on our customers. Interestingly, our ambition for our customers is that we want to make sure that every interaction a customer has with Forte Oil is the most positive one, at least one of the most positive interactions he will have that day.
We also want to focus on our shareholders; we have the co-investors and we have the minority shareholders. For us, we don’t really see the difference between them, we are going to try using some of the focus to reduce our operating margin
In this phase, I also want to make sure that the business is sustainable. We are going to make sure that we run a business that adapts to changes. As we know, there are very important things happening in the two energy mix right now, where people are talking about renewables, people are open-minded and looking at all of the technology that comes from the space. We want to make sure that we are on top of it and we’re not left behind in any way.
[READ FURTHER: Forte Oil Plc declares a special interim dividend to shareholders]
More so, on corporate governance, for us, it is significant. Forte Oil is a leader and we don’t want to change that. We intend to consolidate our report ahead of time and get them across to our regulators, and investors as at when due.
In this new phase of the company, transparency is also one of our key focuses. We will create an open platform, such that everyone will see how we intend to wait around. With this, we believe we can create a truly representative business that sends across Nigeria.