Forte Oil Plc Shareholders have approved the company’s plan to restructure its operations by divesting from its upstream services and power generating businesses and the sale of its downstream business in Ghana. Forte Oil plans to streamline its operations and focus on its Nigerian downstream marketing business.
At the Annual General Meeting (AGM) in Lagos, shareholders authorised the board of the company to sell its stakes in Forte Upstream Services Limited, Amperion Power Distribution Limited and AP Oil & Gas Ghana Limited.
The meeting mandated the board of directors to invest the net proceeds from the divestments in the downstream marketing business.
AP Oil & Gas Ghana Limited and Forte Upstream Services Limited are wholly owned subsidiaries while Forte Oil owns 57 per cent equity stake in Amperion Power Distribution Company Limited.
Forte Oil Plc Chairman, Femi Otedola said the restructuring was aimed at ensuring sustainable growth and returns to shareholders.
“We concluded on focusing our resources on our core competence, and streams of uninterrupted dividends for our shareholders,” Otedola said.
Key extracts of the audited report and accounts for the year ended December 31, 2017 showed that group turnover dropped from N148.61 billion in 2016 to N129.44 billion in 2017. Gross profit increased from N20.58 billion to N24.12 billion. Operating profit rose from N9.62 billion to N14.26 billion. Profit before tax doubled from N5.34 billion in 2016 to N10.63 billion while profit after tax jumped from N2.89 billion in 2016 to N12.23 billion in 2017.
Underlining the rationales for the strategic business change, Forte Oil had said its decision to divest from upstream services and power generating businesses will boost its distributable earnings for the benefit of shareholders.
According to the company, following the significant changes in the oil and gas industry in recent years, only downstream operators with huge investments in both storage and distribution infrastructures can remain competitive and operationally efficient in the long run.
Forte Oil noted that that although the power business profitable, it has huge receivables due from the Nigeria Bulk Electricity Trading Plc (NBET) and a significant portion of its distributed earnings is also utilised in servicing the acquisition debt finance.
