Between Ardova and Eternal: A Corporate Financial Analysis of the duo in the downstream sector …1

The oils and gas sector has been one of the major mainstays of Nigerian economy. The sector contribute about 98% to the country foreign exchange and 6.3% to the country’s GDP. While oil and gas exploration of exportation is very critical to Nigerian economy from macro perspective, the sales and distribution of these products is equally important because of its impact at the micro level of the economy. The exploration and exportation of oil and gas, which is often referred to as ‘Up-stream” sector is dominated by multi-national oil and gas companies, i.e, Mobile, Shell, Chevron etc. however, the Players in the sales and distributions of these products, often referred to as “Down-stream”  sector are, but not limited to, indigenous companies like Ardova oil, Eternal oil etc.

The ability of an organization to continue to play its role in whichever sector that it plays in is mainly reflected in its annual financial report. Financial reporting and analysis is the process of collecting and tracking data on a company’s finances, including its revenues, expenses, profits, capital, and cash flow. It is often used to inform strategic decisions of an orgnisation and to reflect its condition for prospective investors and regulations. This publication therefore it poised at analyzing last ten years financial report of Ardova oil and Eternal oil, who are major player in the downstream sector. This is with a view of making you, the reader have inform knowledge about the state of the companies.  

Background

Ardova Plc, the company, is a Nigerian energy company involved in the distribution of petroleum products. The company was incorporated in 1964 as British petroleum and in 1978, for the purpose of indigenisation, NNPC acquired 60% stake in the company with 40% opened up to the Nigerian public. In 1979, the name was changed to African Petroleum Limited (AP).

Due to the privatization policy in 2000, NNPC sold 40% of its stake in the business to the Nigerian public and five years after, in 2005, NNPC re-acquired an equity stake in the business. In 2007, Zenon Petroleum acquired a majority interest from NNPC and between 2010 and 2011, there was a rebrand to Forte Oil under new management.

Between 2005 and 2015, Forte oil acquired 414 MW thermal IPP, resumed dividend payments and also re-organized its capital structure. In 2019, Ignite Investments and Commodities Ltd concluded acquisition of 74.02% equity stake in Forte Oil Plc downstream operations after which the name was changed to Ardova Plc.

Ardova business is split into 5 categories, namely:

1. Marketing & Distribution – This arm of the business involves distribution of premium motor spirit (PMS), automotive gas oil (Diesel), dual-purpose kerosene (DPK), fuel oils and jet A-1 fuel.
2. Air AP (Aviation) – This arm of the business is focused on supply of aviation fuels to local and international airlines.
3. Liquefied Petroleum Gas (LPG) – This arm of the business is focused on the distribution of cleaner fuel for cooking, transportation and power generation.
4. AP Lubricants – This arm of the business focuses on producing and distributing high-quality lubricants brands for various automotive and industrial lubrication needs.
5. Renewable Energy – This arm of the business is for developing and distributing renewable energy solutions that meet basic lighting needs of Nigerians.

While Eterna Plc, manufactures and provides imported fuels as well as a variety of lubricants and petroleum products to Nigeria’s retail, industrial, agricultural, automotive, marine, and energy sectors. The Trading section imports and distributes premium motor fuels, automotive gas oil, base oils, bitumen, low-pour fuel oil, and crude oil in large quantities. It also sells dual-purpose kerosene. Castrol BP, a leader in specialty chemicals and worldwide lubricant technology, and the corporation have a technical trade connection. Eterna Plc has the sole right to import and market Castrol products in Nigeria and the ECOWAS area thanks to a distributorship arrangement. With a capacity of 34 million liters, the company’s coastal tank farm in Lagos, aviation depot at Nnamdi Azikiwe International Airport in Abuja, coastal storage facility in Ikot Abasi and Akwa Ibom state, and filling stations in the country’s major cities and towns are all facilities owned by the company. Eterna Oil  and Gas Ltd, the company’s original name, was founded in 1991. In 1997, it was re-registered as a public limited company. It is situated in Lagos, Nigeria which serves as its headquarters. Eterna Plc is listed on the Nigerian Stock Exchange as Eterna Plc (ETERNA.ng).

…to be continued..