Forte Oil to diversify to local refining, seeks capital raise

Plc said on Friday it was in talks for a strategic partnership with a major refinery for local refining of petroleum products, even as it seeks additional capital raise of N20 billion via equity.

Addressing stockbrokers and investors at the “Facts Behind the Figures,” on the Nigerian Stock Exchange (NSE) in Lagos, Mr Akin Akinfemiwa, Forte Oil Chief Executive Officer, said the company was in aggressive pursuit of mergers and acquisition opportunities along the energy value chain.

The CEO said the company was holding talks with the Warri Refinery to form a strategic partnership for increased local output capacity, noting that details were still being worked out.

He stated that the venture might be one that could prepare Forte Oil to eventually go deeply into refining of petroleum products to see if Africa’s top oil exporting country could refine products for local consumption in a few years to come.

The Warri Refinery, initially built to supply 100,000 barrels per day (bpd) output at its inception in 1978, was in 1987 upgraded to run a bigger capacity of 150,000 bpd. Further equipped in 2000, it went for 200,000 bpd, but lack of maintenance has seen it run less than 40 per cent of its full capacity since 2016.

Speaking on the planned additional capital raise, Executive Director and Group Chief Financial Officer, Mr Julius Omodayo-Owotuga, explained that it would provide the necessary liquidity to actualise the company’s growth strategies and positioned the company for the years ahead.

It will be recalled that Forte Oil Plc shareholders approved the raise of N100 billion capital during the company’s Annual General Meeting, authorising the board to raise the capital in tranches.

Forte Oil, formerly African Petroleum with interests in fuel distribution and operates the Geregu Power Plant, plan to diversify into the upstream sector through acquisition of marginal oilfields.

It has also been seeking new investments to reduce reliance on imported oil products that consume a large portion of Nigeria’s scarce foreign currency reserves, especially with low oil prices.

Shares of Forte rose by 4.99 per cent on Friday to N60.37, giving it a market value of N78.6bn, even as its market price has fallen 32 per cent, after last year’s 74 per cent slump.