Oil Firms Suffers Recession, Cuts Staff Salaries By 50%

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Due to the economic recession, it is no longer business as usual for oil firms operating in Nigeria who have come under financial challenges.

An insider told Leadership that fluctuations in the sector have led to a situation where some of the companies have slashed workers’ salaries by 50 percent. While some withheld salaries and have reduced the quantum of investments in the country.

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For instance, the management of New Cross Petroleum Limited, an indigenous oil and gas firm based in Lagos, recently announced, through email correspondence, a 50 percent cut on its staff salaries for a time range of six months.

Speaking to journalists, an anonymous senior staff of the company confirmed the development and he said the new salary regime is expected to take effect from this month.

“We are obviously not happy with the development but we are discussing with the management and since the month is yet to end, we do not know if they will reconsider,” he said.

Review of about 10 oil firms listed under oil and gas sector of the oil and gas sector of the Nigerian Stock Exchange showed that losses incurred by four of them outweighed the profit garnered by the remaining six.

Oil firms with losses for the half year period under review  were mentioned including Oando Plc, Seplat Petroleum Development Company Plc, Capital Oil and Japaul Oil Plc. These companies posted a combined loss of N42.1 billion, compared to N18.5 billion profit made as at June 2016 by the other six companies namely Conoil Plc, Total Nigeria Plc, Eterna Oil Plc, Forte Oil Plc, Mobil Nigeria Plc and MRS Oil Plc.



While Oando reduced its losses of N35.014 billion incurred in June 2015 by 22.9 percent to settle at a loss of N26.991 billion, Capital Oil reduced its losses by 88.6 percent to a loss of N6.530 million from N57.359 million posted in the prior year. Seplat on its part recorded a loss of N12.808 billion falling 56.8 percent from a profit of N8.169 billion made in the corresponding period of 2015, while Japaul Oil’s losses increased 19.9 percent to N2.301 billion in June 2016 from N1.919 billion in the same period of 2015.

On the other hand, MRS Oil Plc recorded the highest profit growth, climbing 2,319 percent in one year after a profit of N909.7 million in June 2016 from N37.6 million profit in June 2015, this was followed by Total Nigeria Plc that grew its 2016 half year profit of N8.934 billion by 270.6 percent from N2.411 billion.

Conoil Plc came third with a 190 percent growth in post-tax profit of N1.042 billion from N359.413 million in June 2015, while Eterna Oil Plc profit after tax appreciated 63.4 percent to N977.5 million from N598.3 million.

Mobil Nigeria Plc’s profit also increased 52 per cent to N4.416 billion from N2.910 billion and Forte Oil Plc posted a profit of N2.233 billion, 11.8 percent lower than N2.530 billion in June 2015.

Further analysis on the performance of the oil and gas sector stocks showed that Total Nigeria Plc’s stocks recorded the highest year to date (YTD) returns of 88.99 per cent, Eterna Oil Plc followed with a YTD return of 71 per cent, Conoil Plc came third with a YTD return of 57 per cent.

Seplat and Mobil yielded 28 and 24 percent YTD returns respectively while Capital Oil and Japaul Oil were flat.Oando, Forte Oil and MRS Oil recorded a negative YTD return of 44 per cent, 32 per cent and 21 per cent respectively.

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It was reported that in spite of the country’s foreign exchange volatility and lower oil price, these companies’ revenue for the period under review increased 14 per cent from N492.8 billion to N560.7 billion with a significant portion contributed by the sale of lubricants and other petroleum products sold and distributed by these oil firms nationwide.