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Forte Oil’s Profit Rises to N7bn

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Forte Oil

Forte Oil Plc has recorded a profit before tax of N7.01bn in the 2015 full year audited result, representing an increase of 17 per cent over the N6.01bn made in the previous year.

The firm stated that its revenue, however, declined to N124.62bn in the 2015 fiscal period compared to N170.13bn in the same period in 2014.

Profit after income tax also increased by 30 per cent to N5.79bn compared to N4.46bn in the same period in 2014, with earnings per share increasing by 86.8 per cent to N4.11 compared to N2.20 in the previous year.

The firm said in a statement, “The increase in PPE of 19 per cent is attributable to the N9.6bn paid so far for the major overhaul of Forte Oil’s 414MW Geregu power plant aimed at optimising and increasing its generation capacity from 414MW to 435MW, with an estimated completion date for H1, 2016.

“Forte Oil witnessed an increase in capacity utilisation at the Geregu power plant; however, margins reduced from 58 per cent to 42 per cent due to increase in gas costs caused by exchange rate fluctuations.”

According to the firm, Geregu Power Plc has also declared a dividend of N2.50bn to be paid to all shareholders upon ratification of at the company’s Annual General Meeting.

It added that the company’s growth in profit was attributable to the significant increase recorded in the sales of energy in the power generation segment as well as Premium Motor Spirit, Automotive Gas Oil, Aviation Turbine Kerosene and the production of chemicals, lubricants and greases.

The firm said the result was a feat in the history of the Nigerian Stock Exchange, adding that it had also set a precedent by filing approved results 30 days after the year end ahead of the regulatory deadline of 90 days.

“The board of directors has also proposed a cash dividend of N4.50bn, which will be paid to all shareholders upon the ratification of the proposal at its forthcoming Annual General Meeting,” it added.

The Group Executive Director, Finance and Risk Management, Forte Oil Plc, Mr. Julius Omodayo-Owotuga, was quoted as saying that the decline in revenue by 27 per cent was as a result of the reduction in the pump prices for most petroleum products, largely driven by the decline in crude oil prices.

He said, “In addition, the company also decided to manage its foreign exchange and subsidy exposure by reducing the importation of petroleum products for the year 2015.

“Other incomes increased by 190 per cent due to income from investment in securities held to maturity, freight income from the 100 trucks acquired the previous financial year, and sale of investment property. The increase in administrative expenses is a result of our decision to exit dollar-denominated loans and convert the same to naira at the prevailing exchange rates.”

Punch

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Gold

Gold Prices Rise as Soft Dollar Supports Safe-haven Appeal

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gold bars - Investors King

Gold prices firmed on Monday, propped up by a subdued dollar and slight retreat in the U.S. Treasury yields, with investors gearing up for a week of speeches from U.S. Federal Reserve policymakers for cues on the central bank’s rate hike path.

Spot gold was up 0.5% at $1,759.06 per ounce, as of 0400 GMT, while U.S. gold futures were up 0.4% at $1,759.00.

While the dollar index softened, the benchmark 10-year Treasury yields eased after hitting their highest since early-July. A weaker dollar offered support to gold prices, making bullion cheaper for holders of other currencies.

“Gold is still looking slightly precarious where it is right now, and it’s probably bouncing off key technical level around $1,750,” IG Market analyst Kyle Rodda said.

“Gold remains an yield story and that yield story is very much tied back to the tapering story.”

A slew of Fed officials are due to speak this week including Chairman Jerome Powell, who will testify this week before Congress on the central bank’s policy response to the pandemic.

“There’ll be a lot of questions being put to Fed speakers about what the dot plots implied last week and weather there is higher risk of heightened inflation going forward and that rate hikes could be coming in the first half of 2022,” Rodda added.

A pair of Federal Reserve policymakers said on Friday they felt the U.S. economy is already in good enough shape for the central bank to begin to withdraw support for the economy.

Gold is often considered a hedge against higher inflation, but a Fed rate hike would increase the opportunity cost of holding gold, which pays no interest.

Investors also kept a close watch on developments in debt-laden property giant China Evergrande saga as the firm missed a payment on offshore bonds last week, with further payment due this week.

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, increased 0.1% to 993.52 tonnes on Friday from 992.65 tonnes in the prior session.

Silver rose 0.9% to $22.61 per ounce.

Platinum climbed 1.3% to $994.91, while palladium gained 0.7% to $1,985.32.

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Crude Oil

Brent Crude Oil Near $80 Per Barrel Amid Supply Constraints

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Brent crude oil - Investors King

Oil prices rose for a fifth straight day on Monday with Brent heading for $80 amid supply concerns as parts of the world sees demand pick up with the easing of pandemic conditions.

Brent crude was up $1.14 or 1.5% at $79.23 a barrel by 0208 GMT, having risen a third consecutive week through Friday. U.S. Oil added $1.11 or 1.5% to $75.09, its highest since July, after rising for a fifth straight week last week.

“Supply tightness continues to draw on inventories across all regions,” ANZ Research said in a note.

Rising gas prices as also helping drive oil higher as the liquid becomes relatively cheaper for power generation, ANZ analysts said in the note.

Caught short by the demand rebound, members of the Organization of the Petroleum Exporting Countries and their allies, known as OPEC+, have had difficulty raising output as under-investment or maintenance delays persist from the pandemic.

China’s first public sale of state oil reserves has barely acted to cap gains as PetroChina and Hengli Petrochemical bought four cargoes totalling about 4.43 million barrels.

India’s oil imports hit a three-month peak in August, rebounding from nearly one-year lows reached in July, as refiners in the second-biggest importer of crude stocked up in anticipation of higher demand.

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Crude Oil

Oil Holds Near Highest Since 2018 With Global Markets Tightening

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Crude Oil - Investors King

Oil held steady near the highest close since 2018, with the global energy crunch set to increase demand for crude as stockpiles fall from the U.S. to China.

Futures in London headed for a third weekly gain. Global onshore crude stocks sank by almost 21 million barrels last week, led by China, according to data analytics firm Kayrros, while U.S. inventories are near a three-year low. The surge in natural gas prices is expected to force some consumers to switch to oil, tightening the market further ahead of the northern hemisphere winter.

China on Friday sold oil to Hengli Petrochemical Co. and a unit of PetroChina Co. in the first auction of crude from its strategic reserves said traders with the knowledge of the matter. Grades sold included Oman, Upper Zakum and Forties.

Oil has rallied recently after a period of Covid-induced demand uncertainty, with some of the world’s largest traders and banks predicting prices may climb further amid the energy crisis. Global crude consumption could rise by an additional 370,000 barrels a day if natural gas costs stay high, according to the Organization of Petroleum Exporting Countries.

“Underpinning the latest bout of price strength is a tightening supply backdrop,” said Stephen Brennock, an analyst at PVM Oil Associates Ltd.

Various underlying oil market gauges are also pointing to a strengthening market. The key spread between Brent futures for December and a year later is near $7, the strongest since 2019. That’s a sign traders are positive about the market outlook.

At the same time, the premium options traders are paying for bearish put options is the smallest since January 2020, another indication that traders are less concerned about a pullback in prices.

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