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Ibe Kachikwu

Why indigenous, IOCs returned to profitability even in recession

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From far away Houston Texas, United State of America at the venue of the ongoing Offshore Technology Conference (OTC), indications have emerged that both the federal government and oil and gas companies including local and International Oil Companies (IOCs) are now on the same page of recovery after periods of lull.

The good news according to conferees is attributable to first of all, the smooth sailing cuts policy by the organization of Petroleum Exporting Countries (OPEC) which was further adopted by non members.

Besides, the cuts powered global oil prices to rise considerably to the advantage of Nigeria and three other volatile nations who were exempted from the cuts after all.

Other local reasons for the recovery are not unconnected with the apparent drop in hostilities in the oil rich Niger Delta region due to several peace initiatives put up by the federal government and monitored by the office of the Vice president.

Whereas foreign reserves are on the rise hitting over $30b within the period, about five oil companies, yesterday announced their total return to profitability at the OTC.

This was revealed as the affected companies operating in Nigeria witnessed a record-breaking profit of over $10 billion (N3.6 trillion) during the first quarter of 2017.

Top in the corporate gainers in the entire revenue surge include Chevron Corporation which reported earnings of $2.7 billion for first quarter of this year, when compared to a loss of $725 million in same quarter in 2016.

Again, Exxon Mobil Corporation announced an estimated first quarter 2017 earnings of $4 billion, compared to $1.8 billion a year earlier, resulting from improvement in commodity prices, cost management and refining operations.

Chief Executive Officer of Total Nigeria, Patrick Pouyanne, said that the company’s adjusted net income increased by 56 per cent to $2.6 billion in the first quarter 2017, in line with the strong recent quarterly results of 2016, due to good operational performance and a steadily decreasing breakeven.

A major indigenous operator, Seplat Petroleum Development Company, said that in its first quarter 2017 result, it made a gross profit of $19.1 million, during the period under review.

Chief Executive Officer of Seplat, John Watson, averred that “We benefitted from increasing crude oil prices and ongoing efficiencies being implemented across the company. We continue to make good progress on reducing our spending.”

Explaining more, Chief Executive Officer of Chevron, Darren Woods, attributed the company’s outstanding performance to increase in commodity prices and the company’s continued focus on controlling costs and operating within the best practices preferences.


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