Conoil, one of Nigeria’s major indigenous exploration and petroleum products marketing companies, operating Oil Mining Leases (OMLs) 103, 59, 150 and 153, is apparently having operational lapses, as it struggles to maintain stable leadership following the exit, in December 2015, of its long serving Managing Director, Mr. Ebi Omatsola.
Omatsola ran Conoil for 25 years. The company has failed to maintain stable leadership since his exit and the challenges which preceded his departure is telling on its operations. In its Q1 2016, the company incurred a loss before tax of N860.6 million and loss after tax of N943.76 million.
Since Omatsola’s departure, the company has witnessed the coming and exit of two subsequent managing directors, none of who lasted a year. Taiwo Olusina, brought in on account of his exploits at ExxonMobil and Afren, was at the helm for only a matter of months. Mathew Willsher, former MD/CEO of Etisalat who came in afterwards, only had two months. The current MD, Olusina Olonode functions in acting capacity.
A number of key personnel have also left the company. The list include: Ayo Olatunde, former General Manager, Geosciences; Kayode Ayansina, General Manager, Petroleum Engineering; Mike Adino, General Manager Operations and Akin Seweje, Commercial Director and Executive Assistant to the companys founder and Chairman, Dr. Mike Adenuga.
However, things have improved, financially, from the very dark Q1 2016. Regardless, Conoil continues to struggle with issues. Now reputed for late submission of results, Conoil’s inability to submit its audited Q1, 2018 financial results within the required time frame prompted the Nigerian Stock Exchange (NSE) to suspend trading of its shares on August 6, 2018. It released the result on August 8, however, and NSE lifted the suspension.
It’s already a pattern. The company is yet to release its Q4, 2018 results at a time when many quoted companies have filed annual reports. It had, however, released it’s Q3, 2018 results on October 11, but even so, it has managed to establish a pattern of late submission. The company’s audited results for 2017 were submitted June 1, 2018, six months after the financial year ended on 31 December. This it had blamed on problems with its accounting software.
Yet, Q1 2017 results were submitted on June 22, 2017. Q1 2016 results were submitted on September 16, 2016. Q1 2015 results were submitted on September 21, 2015. Its 2016 annual report was submitted on June 2, 2017. And that of 2015 was submitted on September 8, 2016.
The late submission of reports points to a consistent pattern of tardiness. And now, it would appear that what ails the company is taking a toll on its production capacity, even as bottom line remains inconsistent.
After some delay in filling its 2017 annual report, when it eventually did, it was perhaps obvious why it had been reluctant. Revenue went up 35 percent to N115.5 billion from N85 billion in 2016 and N82. 9 billion in 2015. But that was the only positive news. And even so, it lagged behind competitors with French major, TOTAL posting revenue of N288 billion and Forte Oil Plc, N129 billion.
Profit before tax fell by 46 percent to N2.3 billion in 2017 from N4.2 billion the year before. Profit after tax dropped -44.4 percent from N2.8 billion in 2016 to N1.5 billion in 2017. Forte Oil made highest profit after tax with N12.2 billion, while TOTAL ended with a profit after tax of N8 billion. The former, Forte, is struggling of late, however.
What was even more telling was the news accompanying the 2017 Conoil report, to the effect that the Supreme Court had ordered it to pay the sum of N13.2 billion to Vitol S.A. in a case that had dragged for nearly 10 years.
“Judgment was recently given against the Company in the earlier disclosed suit between Conoil Plc and its former suppliers of Automotive Gas Oil (AGO) Vitol S.A. The commercial dispute which arose in 2008 had been contested through the High Court and the Court of Appeal but was finally decided by the Supreme Court in the month of December 2017,” the company had stated in the report.
“The board has resolved that the judgment sum of $43,322,497.57 (N13.2 billion) should be shared between the Company and Synopsis Enterprises Limited and disbursement be made to the Judgment Creditor in the ratio of 85% (N11.2 billion) by Conoil Plc and 15% (N2 billion) by Synopsis Enterprises Limited. The reason for this being that Synopsis Enterprises Limited as a sister Company of Conoil Plc consummated the transaction on behalf of the Company that led to the commercial dispute.”
Little would have been expected of Conoil in 2018 given the circumstance. However, it turned a corner somewhat in the initial quarters of the year and it seemed there were signs of great things to come. In Q1, 2018, revenue clocked N31.3 billion, a 28.2 percent increase from N24.4 billion in the corresponding quarter of 2017.
PBT also increased by 21.5 percent from N255 million in 2017 to N310 million in 2018. And PAT rose 21.9 percent from N173 million in 2017, to N211 million in 2018, while Earnings Per Share increased 20 percent, from N0.25 in 2017 to N0.30 in 2018.
In Q2, 2018, the tempo was sustained. Revenue grossed N54. 48 billion, 21.3 percent increase from N44.92 billion in 2017. PBT increased to 809. 78 million, 29 percent rise from N627.9 million in 2017. PAT also rose 28.9 percent to N550.65 million from N427.29 million the year before. Earning Per Share rose 27.4 percent to N0.92 from N0.62.
Things nonetheless, slowed comparatively, in Q3, 2018. The company earned N75. 83 billion, representing 8 percent increase from N70.22 billion in 2017; PBT increased 11.9 percent to N2.26 bn.
But the company it would appear has seen a reversal of fortune. Sources say top management are exiting and it is currently groping in the dark, with production witnessing significant decline in what insider sources attribute to operational challenges.
The company’s daily crude oil production has plummeted over the last few months to 14,000 Barrels Per Day, a 30 percent drop from the 20,000 bpd it achieved in April 2018 – a level it had maintained for most of last year.
This, sources say, is a result of intractable leadership challenges that has affected production and operation efficiency, inevitably leading to neglect of key production facilities.
The Otuo field, it was revealed, has watered-out due to poor reservoir management, while reports say Ango field is doing far less optimally than envisaged. Yet, the company’s New Mobile Oil Production Units (MOPU), under construction in the United States remains uncompleted.
The company is also said to be slow in exploring the full benefits of the partnership it has with TOTAL, to allow the French major to operate the gas reserves in OML 136 and Oil in OML 257.
The company did not respond to BusinessHallmark email inquiry, but one its shareholders, Mr. Boniface Okezie, noted that the drop in production and other sundry challenges may be as a result of the environment.
“If production is dropping, that may not be attributable to leadership problem. It could be the environment they are operating. I don’t think they have any leadership crisis,” Okezie said.
He however, appealed to the board to either confirm the acting MD or get a fresh person as according to him, having an acting MD does not inspire confidence.
“Acting capacity does not inspire confidence in any organisation, you should have a substantive DG. That will inspire confidence in those who are doing business with you. If you are in acting capacity, not everyone can trust money into your hand because anything can happen,” he said.
“We call on the board to look at these things. If the person who is acting now has all it takes, they should confirm him. But if not, they should go elsewhere and poach another MD.
He emphasised that: “It is the board that formulates policies and the management just implements. So, like I said, it could be environmental factors. It could be that they are watching the market.”