Source: FT Markets data
Downstream oil and gas and power producing firm, Forte Oil (FO) is the worst performer on the Nigerian Stock Exchange (NSE) this year.
Forte Oil which is down 38.5 percent this year, has also lost 81 percent of its value in the past year (between March 2016 and March 2017), see chart.
So what exactly is ailing FO and could this represent a buying opportunity?
Sources tell Business Day Market Intelligence (BMI) that the firm is struggling with liabilities owed power producers or Gencos in the power chain.
FO also has huge debt in its balance sheet which takes a toll on the bottom-line (Net income) via Finance costs which hit N4.28 billion for 2016, compared to net income of N2.89 billion.
The recent bailout of the sector by the Federal Government with a N701 bn guarantee for power generating firms to enable them pay gas producers, should be slightly positive for Forte Oil, but we would not be buyers of the stock here until we see further details of the programme!!
PATRICK ATUANYA
