Forte Oil Records N5.5bn Profit Before Tax in Nine Months

Forte Oil Plc yesterday announced its nine months financial results ended September 30, 2017, showing improved performance. The company recorded revenue of N9.887 billion in 2017, down from N121.1 billion. But the efficient cost management strategies adopted improved the bottom-line despite a lower revenue.

Cost of sale was reduced by 23 per cent, declining from N105 billion to N79.9 billion to bring the gross profit to N16.9 billion in 2017, compared with N15.4 billion in 2016.

Distribution expenses fell by 45 per cent to N1.39 billion, from N2.56 billion, just as administrative expenses was cut by 8.2 per cent to N6.7 billion, from N7.3 billion. Consequently, operating profit stood at N9.7 billion, compared with N7.8 billion in the corresponding period of 2016.

However, net finance cost spiked by 113 per cent fromN2.2 billion to N4.7 billion, apparently due to bond service obligations. Despite the increase in net finance cost, Forte Oil ended the period with profit before tax of N5.5 billion and profit after tax of N5.0 billion, as against N5.6 billion and N2.7 billion in respectively in 2016.

Market operators said the considering the high cost of finance paid during the period, the company should intensify efforts to complete its equity capital raise exercise.

The energy company had planned to raise N20 billion fresh capital via public offer using a book building process. However, it recently put the plan on hold pending the conclusion of a corporate restructuring that is aimed to maximize the emerging opportunities in the Nigerian energy sector.

The shareholders had, at the company’s annual general meeting (AGM) held last July authorised the directors to raise, by way of public offering, right issue or any other method they deem fit, additional N20 billion, whether locally or internationally or a combination of both through the issuance of shares, convertible securities, and/ or any other instrument(s) at such dates and time on such terms and conditions, including through a book building process or other process(s0 all of which shall be determined by the directors subject to the approval of relevant regulatory authorities.

The Securities and Exchange Commission (SEC) had approved the company’s proposed offering by a way of book building.

But the company last month said:“However, the Board of Forte Oil has taken a strategic decision to put the offer on hold pending the conclusion of an ongoing corporate restructuring with respect to maximising the emerging opportunities in the Nigerian emerging sector(oil, gas and power) which will be to the ultimate benefit of all stakeholders.”