Investors eye oil & gas stocks as sector revenue surges 57% year-on-year

By Chukwuma Umeorah

Investor confidence in Nigeria’s oil and gas sector is on the rise as six major companies listed on the Nigerian Exchange Limited (NGX) reported a combined revenue of N6.69 trillion in 2024, an increase of 57 per cent from N4.27 trillion in 2023. Analysts attribute the surge to the Federal Government’s deregulation policies and rising petroleum prices, which have boosted the financial performance of industry players.

Oando Plc led the pack with N4.12 trillion in revenue, a 45 per cent growth from N2.85 trillion in 2023. Other major contributors include TotalEnergies Marketing Nigeria Plc (N1.04 trillion), Aradel Holdings Plc (N581.02 billion), Conoil Plc (N323.13 billion), Eterna Plc (N313.6 billion), and MRS Oil Nigeria Plc (N312.23 billion).

Market analysts suggest the revenue growth signalled investment opportunities, particularly in companies with strong fundamentals and expansion strategies. According to the Chief Operating Officer of InvestData Consulting Limited, Ambrose Omordion, “These companies reported an increase in revenue due to higher margins on products they sold this year. The reforms in the oil and gas sector have impacted revenue that translates into profit.”

The Federal Government’s policy shift, including the implementation of the Petroleum Industry Act (PIA) and the deregulation of the downstream sector, had allowed these companies to adjust prices in response to market forces. The resulting increase in petroleum product prices, particularly Premium Motor Spirit (PMS), had been a major driver of the revenue boom. Data from the National Bureau of Statistics (NBS) shows that the average retail price of petrol surged by 76.9 per cent to N1,189.12 per litre in December 2024, compared to N671.86 in December 2023.

Aradel Holdings, which posted a 163 per cent revenue increase from N221.14 billion in 2023 to N581.02 billion in 2024, exemplifies how operational expansion and strategic acquisitions are enhancing growth potential.

The company’s CEO, Adegbite Falade, attributed the performance to increased hydrocarbon production and the utilization of alternative evacuation routes. “We successfully drilled Wells 14 and 15, marking the conclusion of our Phase 1, four-well turnkey drilling campaign with favourable results,” he said. “To support anticipated production growth, we expanded the throughput capacity of our evacuation channels, positioning us to maintain strong output and efficiency levels throughout the year.”

Similarly, Oando’s aggressive pursuit of scale through acquisitions had also captured investor attention. The company’s successful acquisition and integration of Nigerian Agip Oil Company Limited (NAOC) significantly boosted production capacity. Group Chief Executive, Oando, Wale Tinubu, stated, “Despite a challenging operating environment, we achieved a 45 per cent increase in revenue to N4.1 trillion, reflecting the strength of our business model and a nine per cent rise in profit after tax to N65.5 billion, notwithstanding the costs associated with the onboarding of NAOC.”

The upward trajectory of these oil and gas firms is not without its challenges. Analysts warn that while rising petroleum prices have supported revenue growth, volatility in global oil markets and domestic operational risks, such as crude oil theft and pipeline disruptions, could impact future earnings. However, the Vice President of Highcap Securities Limited, David Adnori, remained optimistic, citing increased business activities and the policy environment as key growth drivers. “The growth recorded in revenue by these companies as declared on the Nigerian Exchange has a lot to do with improvement in business activities than the hike in price of petroleum products,” he explained.