How are Nigerian oil stocks performing?

Jun 20, 2022|Adesola Afolabi

There is a global oil boom or doom, depending on how you look at things. Oil-producing giants like Russia, which make about $1 billion from daily energy exports, are smiling to the bank due to rising oil prices and robust production.

Key takeaways:

Amidst the rising price of crude and refined petroleum, oil companies worldwide are making higher profits and shareholders of these companies are benefitting as well. For instance, Shell’s Q1 2022 dividend per share was 44% higher than the same period of last year.
However, in Nigeria, the performance of oil companies is mixed due to several factors. Seplat, an indigenous oil and gas company and an upstream player, recorded significantly higher revenue in the first quarter of this year. Despite the higher revenue, Seplat’s profit after tax dropped due to the payment of earlier deferred taxes.
The impact of the current global oil price boom on the shareholders of oil companies in Nigeria depends on the kind of oil company they’ve invested in. The decisions these companies make and their operating sectors also impact overall earnings.

The Organisation of Oil Producing Exporting Countries (OPEC) mentioned in its June 2022 report that Russia has managed to keep exporting its oil despite the pressure from sanctions. The explanation is that Russia’s crude exports to Asia are estimated to outpace the decline in exports from the country to the rest of Europe. However, an oil-producing giant like Saudi Arabia has a local demand 3x lower than its total daily supply and can flood the global market with more oil to bring down prices.

But the incentives to do so are not much. For one,