Nigerian Oil & Gas: Capitalising on market dislocations

Significantly improved fundamentals

Nigerian major oil marketers have recorded significant gains in 2016, a year in which other sectors continue to struggle. Mobil Oil Nigeria (Mobil) and Total Nigeria (Total) posted average sales and EPS growth of 44% y/y and 161% y/y respectively in H1 2016. The primary driver behind the sales growth was market share gains due to comparatively better access to fx for product importation compared with independent marketers. Furthermore, the re- pricing of gasoline in May supported growth in Q2. The Petroleum Product Pricing Regulatory Agency (PPPRA) raised the fx assumption in its pricing template by more than 40% to N285/US$ to better reflect market realties. This led to a q/q improvement in gross margin for both names during the quarter, thanks to relatively cheap inventory.


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