Vanguard (Lagos)

25 March 2010

West Africa: Conoil's US$50 Million Investment in Region Drives Stocks

Major petroleum products marketer, Conoil Plc, has continued to post impressive performance on the floor of the Nigerian Stock Exchange (NSE) as investors continue to cash in on the expected favourable returns from the company's investment foray into the lucrative West African oil marketing industry.

Following the increase in its demand, the equity for the second day running this week topped the price gainers' chart as it added N1.1 to close at N40.10 per share at the end of trading on Wednesday. The equity had earlier recorded a growth of N1.90 on Tuesday to close at N39.00 per share.

Stock analysts explained that the current fortune of Conoil's stocks in the market is not unconnected with the $50million investment drive by the company to establish mega retail outlets in the West African sub-region in a bid to extend its business portfolio and create a platform to diversify its earnings.

"The market is responding to stocks that show the fundamentals for good returns and Conoil is one of them," a stock broker Peter Aletor said, adding, "Investors are still trying to digest the package and I can assure you, by time the full import of the offshore investment drive dawns, more investors will strive to take a position."

"Investors' renewed confidence in the equity is only natural considering the company's pedigree as an organization with a consistent dividend policy," another broker said.

Specifically, Conoil was reported to be targeting West African countries where the downstream petroleum sector is fully deregulated. The company, the report added, has earmarked about $50 million (about N7.5 billion) for the offshore retail expansion project where it plans to construct at least five mega stations each in Ghana and Togo under the first phase of the expansion programme.

It would be recalled that for better part of early this month, the investors demand for the stock was on the upward trend, causing the oil marketing company to record 15 per cent capital appreciation of N5.37 growth in three consecutive days.

It would be recalled that Conoil pioneered the construction of new generation fuel retail outlets (dubbed mega stations) in Nigeria, where the outlet is a unique architectural masterpiece fitted with top-class facilities, including high-tech non-space fuel dispensing pumps, to offer variety of services to consumers, comparable to those in Europe and other developed parts of the world.

The offshore investment drive was said to have received the backing of the Nigerian petroleum regulatory authorities, which is in line with the government's oil sector reform plan that seeks to promote the country's indigenous enterprises to be major players in both local and overseas markets

Conoil's strategic move into the West African market would be in consonance with the Mike Adenuga Group's business strategy of spreading its tentacles beyond Nigeria with the African continent as its ultimate goal.

Adenuga, the Conoil Chairman, has often reiterated the company's determination to set new standards of service delivery, strengthen its capital base to enable it access the real opportunities at home and abroad in order to drive its business to a more profitable level.

Industry analysts are of the view that with Ghana fast transforming into an oil-producing country, that country's downstream petroleum sector is projected to grow significantly and provide opportunities for good returns on investment.

Apart from the offshore investment drive, the company has also put in place strategic expansion programme of its retail network across the country with the aim of increasing turnover from premium motor spirit (petrol) by 60 percent.

Adenuga affirmed during the company's last annual general meeting that Conoil remained committed to maintaining its growth momentum, building value for customers and delivering competitive profitability.

The Chairman also reassured all stakeholders of the will and capability of the company's Board and management to benchmark Conoil against best global standards and practices in order to make it a world-class company that every Nigerian will be proud of.

Conoil he said, had taken steps to consolidate its strength across the businesses by investing in new facilities and developing a new portfolio of excellent brands, supported by effective distribution machinery.

According to him, the company is poised to acquire additional capacity to meet the long-term needs of its growing business.

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