Thursday, February 18, 2021 /04:40 AM / By Proshare Research/ Header Image Credit: EcoGraphics Proshare Nigeria Pvt. Ltd. The Oil and Gas sector suffered a twin hit in 2020. Plunging oil demand brought about by the COVID-19 and the price war between Russia and Saudi Arabia further worsened the financial position of an already vulnerable sector. The fall in oil prices heavily impacted the Nigerian economy. The sector accounts for over half of the economy’s revenue and is the highest forex earner of the country.
In Q1 the sector grew by +5.06%, at this time, the sector was yet to feel the impact of the pandemic. However, Q2 and Q3 2020 recorded a consecutive decline in growth. Its contribution to GDP has also seen a steady decline from the beginning of the year. In Q3 2020, its contribution to GDP stood at +8.73%. Comparing the latest result released by NBS to Q3 2019, growth of the sector declined Y-o-Y by -13.89% while its contribution to GDP declined by -10.64% Y-o-Y ( see Chart 37 ).
Chart 37 : Oil & Gas Sector Growth and Contribution to GDP 2014 – 2020 (%) Proshare Nigeria Pvt. Ltd. Source: NBS, Proshare Research
Case Study
Seplat Petroleum Development Company (SPDC)
SPDC, an upstream player in the Nigerian oil and gas sector which is listed both on the Nigerian Stock Exchange and London Stock Exchange. The latest result of the Company shows the revenue and profit of the Company are recovering from the severe impact of the COVID-19 pandemic which it recorded in Q2 2020. Also, technical analysis of the Company, i.e., its share price movement was heavily impacted as year-to-date (YTD) performance of the share price recorded a -32.99% decline.
At the beginning of the year, the share price of the company was well above N500, in July 2020 prices went as low as N312. With the gradual reopening of both the global and domestic economy, the share price of SPDC has also picked up although still below the pre-COVID-19 era ( see Chart 38 ). Proshare Nigeria Pvt. Ltd. Source: NSE, Proshare Research
SPDC’ Revenue
In Q1 and Q2 2020, the revenue of the company declined when compared to Q1 and Q2 2019. However, Q3 2020 results show growth even higher than what was recorded in Q3 2019.
Its revenue grew by +47.27% Q-o-Q to N55.52bn for Q3 2020, this was against […]
