Daily Independent (Lagos)
8 July 2009
Lagos — The management of petroleum products marketing giant, Chevron Oil Nigeria, last weekend rekindled hope for a quick return to profit after seeming wars of attrition on multiple fronts fought. While the company had to confront staff unions who embarked on industrial actions, and then a court battle over the plans of the core investors- Texas, US based Chevron to divest and thereby transfer its 60 per cent holding to one of the several bidders that indicated interest.
The company reported, as expected very slow growth in earnings, quite unlike its peers, while reporting an outright loss. But there are indications for a quick rebound, judging by the first quarter result that showed the worst is over now, and that the company has started the rebuilding process, following which it projects second quarter sales income of N48.519 billion. The projected amount is as much as its turnover for the whole of last year. From this, the company sees a return from murky waters with net profit at N664.7 million in the second quarter ended June 30, 2009, which rekindles hope that the shareholders could at least smile home with something no matter how small, or need to wait for their share of a bigger pie in the coming years.
This is expected to be further consolidated upon, when the company's sales volume would have yielded an additional N24.065 billion in the months between July 1 and September 30, 2009, representing a 49.59 per cent jump to N72.584 billion, out of which net profit would be N1.112 billion, representing an increase of N447.33 million or 67.29 per cent over the half year forecast figure.
The company's board blamed the lean figures posted for the year ended December 31, 2008, on a protracted industrial action by its branches of the National Union of Petroleum, Energy and Gas Workers Union, as well as the employees unions. The actions, the company said, ground operations to a holt, leading to a loss of market share to rivals, the management hopes to reverse the trend, beginning with the release of its second quarter performance score card in the coming weeks, adding that the trend would be sustained in the current quarter, going by the forecast provided investors through the Nigerian Stock Exchange (NSE), as required by law.
Chevron Oil reported a significant N23.941 billion or 32.96 per cent to N48.687 billion from N72.628 billion, following which it slipped into loss of about N305.726 million, from previous year's N2.994 billion. However, tax credit of about N80.30 million compared with a charge of about N1.035 billion, helped reduce the company's loss position to N225.425 million, as against the net profit of about N1.959 billion reported in the corresponding period of 2007. The 2008 result translated to a loss per share of 88.75 kobo, a significant drop from per share earnings of about 771 kobo out of which the director paid 750 kobo as dividend on each share.
The battle for attrition resulted in the drop in the company's share price on the Nigerian Stock Exchange from a historic high of N441.00 attained last year, bringing its cumulative loss to investors, some weeks later to N200.03, translating to a decline of 45.35 per cent. The latest result has made sure that the company's shareholders will for the first time in a long while go without dividend at the end of a whole year, a year after it ranked as one of the juiciest honey-pot, offering 750 kobo per share, second only to French rival Total Nigeria's 990 kobo by way of interim (350 kobo per share) and final dividend of 640 kobo, from its earnings per share of N12.03.
According to reports, the company's branch of industrial unions- the National Union of Petroleum and Natural Gas (NUPENG) and the Petroleum and Natural Gas Senior Staff Association of Nigeria (Pengassan), may have embarked on strike action, by taking their destinies in their hands. The workers showed interest in buying out the core investors, hence the decision to embark on an industrial action to drive home the point.
Other parties interested in the majority shares included Zenon Petroleum and Gas Limited, which instituted a court case against Chevron and its parent companies overseas, challenging their decision to sell it to other bidders. Zenon argued that it had the right of first refusal, based on its holding then of about 19 per cent stake in Chevron Oil.
Ensuing Legal Battle
The legal battle for the soul of Chevron's over 400 retail outlets and a capacity to pump out well over 16 million litres per day and a storage capacity of well over 700,000 metric tonnes started with the decision of the board and management to divest and concentrate in its traditional exploration and production operations by selling the retail outlet ownership of which it assumed following the acquisition of Texaco. The had subsequently called for expression of interest, which attracted the workers' unions, Zenon, and other competitors like African Petroleum Plc, Habitat Oil and Gas, Oando Plc and Acorn Oil and Gas Limited, among others.
The 60 per cent stake in contention was however sold to MRS Holdings Limited, Petroci Holdings and Corlay Global S.A., a Panamanian company owned by an African-based consortium composed of MRS Holdings Limited, an indigenous oil marketing firm owned by business mogul, Sayyu Dantata, and Petroci Holdings, a Bermudan company despite a court order on July 31, 2008, granting an interim injunction restraining the core investors from divesting 60 per cent stake from Texaco Nigeria Plc. Dantata, said: "We are very pleased to acquire Chevron Nigeria Holdings and this demonstrates further our vision in investing into the future of the downstream oil business in West Africa and its attendant enormous benefits to our dear country.
Meanwhile, Justice Lambo Akanbi had granted Zenon's prayers, restrained the U.S. energy group Chevron Corporation subsidiary and any of its agents from bidding, selling, alienating, transferring, disposing and or parting with the possession of the shares of the fuel retailing arm, pending the hearing and determination of the motion on notice. Zenon reportedly contended in its suit that Chevron did not obtain necessary approval from the Securities and Exchange Commission and minority shareholders before receiving bids from at least four suitors. They include Oando, Habit Oil and Gas, Acorn Oil and Gas Limited and African Petroleum, in which Zenon holds a majority stake.
Conclusion
The attainment of the second and third quarter projections and the possible payment of dividend at the end of current year, is however based on the final settlement of outstanding issues by the various warring parties.
Be the first to Write a Comment!
Copyright © 2009 Daily Independent. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.
AllAfrica aggregates and indexes content from over 125 African news organizations, plus more than 200 other sources, who are responsible for their own reporting and views. Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica.
