Oil and Gas Index Towers Above Other Sectors in H1 2021

Nigeria's oil and gas sector dwarfed other major sectors this year, as the NGX Oil and Gas Index has soared 38.28% in the past six months.

Other major indices had relatively weak runs this year, as the NGX Consumer Goods and NGX Insurance Indices recorded growth of 5.12% and 3.04% respectively, while the NGX Banking Index and NGX Industrial Goods Index recorded declines of 10.06% and 44.17% respectively over the same period.

The NGX Oil and Gas Index comprises ten listed Oil and Gas Marketing companies among which Ardova Plc, Conoil Plc, Eterna, Japaul Gold & Ventures Plc, MRS Oil Nig. Plc, Oando, Seplat, and Total Plc are active, while Capital Oil and Rak Unity Plc have both suspended trading.

Amongst the 8 actively trading companies in the sector, OANDO, CONOIL, JAPAUL, and MRS Plc saw their share prices decline by 11.08%, 4.08%, 19.35%, and 8.36% respectively. Meanwhile, ARDOVA, ETERNA, and TOTAL Plc grew their share prices by 14.39%, 47.06%, and 11.54% with SEPLAT recording an impressive year-to-date growth of 71.51%.

The growth in the NGX Oil and Gas Index was largely spurred by gains in the share prices of Seplat Plc and Eterna Plc.

In the first quarter of 2021, given the 20.5% increase in the average price of Brent crude from Q1 2020 to Q1 2021, Seplat Petroleum Development Company recorded a 36.60% increase in total revenue.

Seplat Petroleum Development Company Plc, a leading Independent Nigerian energy company, is principally engaged in oil and gas exploration and production.

Eterna Plc began the year with a share price of N5.10 and has since gained 47.06% to close the trading day on June 30, 2021, at N7.50. In Q1 2021, the company recorded a 171.02% growth in Net Profit from negative N358.28 million to N254.45 million which contributed to the positive sentiment around the stock.

Eterna is known for dealing in the manufacture, marketing, and distribution of chemicals and lubricants.

Unlike Seplat, the growth in Eterna Plc's share price can be linked to investors’ reaction over their 2020 Annual Result which showed the company's impressive 752.19% profit growth from N144.29 million in 2019 to N941.06 million in 2020 after taxes dropped by over 250% as well as other cost items. Eterna's shares jumped 10 percent a day after the result was announced.

Investors are now betting on this sector as the increase in the average Brent prices would translate to an increase in revenue for oil companies which should also reflect in the Earnings Per Share.