The 10 per cent negative return recorded by the oil and gas sector, making it the worst performing segment on the bourse year to date (YTD) is unsettling investors.
The steep fall comes in a year when the all-share index (ASI), which measures the performance of listed equities, has delivered close to a 50 per cent YTD gain.
While other major sectors – banking, consumer goods, industrials and insurance – have all outpaced the ASI by robust margins, the oil and gas index has lagged far behind, losing a 10 per cent return to emerge as the worst performer on the exchange.
With the banking index up 48.2 per cent, the insurance index climbing 74.2 per cent, the consumer goods index surging 86.1 per cent and the industrial index rising 53.9 per cent, oil and gas is the odd index.
The companies currently in the NGX Oil and Gas Sector Index are Aradel Holdings Plc, MRS Oil Nigeria Plc, Oando Plc, Ardova Plc (formerly Forte Oil Plc), Conoil Plc, Eterna Plc, and TotalEnergies Marketing Nigeria Plc.
The underperformance of the sector marked a sharp reversal from recent years. For instance, at the 2023 financial year, the sector was the second-best performer, closing with a 90 per cent gain. In 2024, it led the five major segments as the best-performing index, delivering a 160 per cent gain, while the ASI appreciated by 37.65 per cent during the period.
Analysts attribute the poor performance of oil and gas stocks to a mix of company missteps, market corrections and macroeconomic pressures.
They pointed out that delayed dividend payments and underwhelming earnings reports have also dampened investor confidence, alongside heavy profit-taking after the sector’s extraordinary rally in 2024.
According to them, the global oil price volatility and rising interest rates have further eroded sentiment, while high share prices have kept many retail investors on the sidelines.
A look at the financial performance of companies under the sector showed that Conoil Plc, in its unaudited financial statements for the second quarter (Q2), recorded a pre-tax profit of N775 million, representing 83 per cent year-on-year (YoY) decline from the N4.686 billion recorded in the same quarter of 2024.
This also represents the second consecutive quarterly decline in 2025, moderating half-year (H1) pre-tax profit to N1.147 billion, a steep fall from N10.219 billion in H1 2024, and a 89 per cent drop.
For the six months that ended 30 June 2025, TotalEnergies Marketing Nigeria Plc recorded revenue of N423.9 billion, a decrease of 20 per cent compared to N529.94 billion in the same period of 2024. The company reported a net loss of N2.86 billion, compared to a net profit of N20.57 billion in the prior year.
Its operating profit decreased significantly to N10.32 billion from N35.01 billion. Basic loss per share was N8.41, compared to earnings per share of N60.6 in the prior year.
On the performance of the share price on the NGX as of Tuesday, August 12, 2025, Conoil Plc resumed transactions for the year at N387.20 kobo but has lost 39.4 per cent of that price valuation to close at N234.50 kobo on Tuesday.
Similarly, Aradel closed its last trading on Tuesday at N520 per share from N598 at which it reopened for transaction in 2025, representing 13 per cent loss.
Also, Seplat Petroleum Development Co. (SEPLAT) began the year with a share price of N5,700. But has since lost 4.39 per cent off that price valuation to close at N5,450.
President of NewDimension Shareholders Association of Nigeria, Patrick Ajudua, said the oil and gas sector’s negative 10 per cent return is largely driven by unstable global oil prices, persistent inflationary pressures, and the impact of oil theft, sabotage, and pipeline vandalism.
He explained that the high cost of borrowing has also weighed heavily on companies’ bottom lines, cutting short financial expectations and significantly eroding profitability.
Ajudua stressed that these challenges can be mitigated if the government ensures adequate pipeline security and surveillance to deter economic saboteurs, guaranteeing stable production levels that will boost revenue, enhance profitability, and reduce operating costs.
He further noted that tackling inflation is critical, as it would lower borrowing costs and ultimately improve the sector’s profit margins.
President of the Ibadanzone Shareholders Association of Nigeria, Eric Akinduro, noted that volatility in the oil and gas sector remains significantly higher than in other sectors, particularly in the wake of the government’s deregulation efforts. He observed that the business environment is no longer as it used to be, with frequent fluctuations in crude oil prices posing a constant threat to the industry.
While the economy appears more stable now, Akinduro warned that increased local refining of petroleum products will intensify competition and adversely affect companies that rely heavily on importation, potentially triggering a price war.
He added that shareholders are still looking forward to seeing companies act more proactively, taking decisive measures that will strengthen their balance sheets and boost profitability by year end.
