A Review of the Nigerian Energy Industry

Investors count losses in Seplat, Caverton as stocks plummet

08 December 2014, Abuja – Investors in Seplat Petroleum Development Company Plc and Caverton Offshore Support Group Plc (Caverton), two companies that got listed on the Nigerian Stock Exchange (NSE) are now counting losses in their investments following persist declined in the share prices of the firms.

Seplat, the only oil exploration and production firm on the NSE, got listed in April both on the Nigerian bourse and London Stock Exchange (LSE) after a successful $500 million initial public offering (IPO).
The stock got list at N576 per share at a ceremony witnessed by Minister of  Petroleum Resources  Mrs.  Diezani Alison-Madueke, and the Minister of Industry, Trade and Investment, Mr Olusegun Aganga. Seplat added N318 billion to the market capitalisation of the NSE.
seplat-logoSimilarly, Caverton got listed as the first offshore support company in the newly created Support and Logistics sub-sector of the NSE at N9.50, adding N32 billion capitalisation to the market.

While the listing of the two companies  was greeted with high  expectations and enthusiasm, those positive sentiments have vanished as investors, who bought the stocks during and after the listing are now counting their losses.
Although the equities market is suffering a general bear run, analysts said given the  positive pictures painted about  future  the two companies, many investors are expressing high disappointment at the rate their investments are being eroded.
Caverton, which was listed at N9.50 on May 20, for instance, has not risen above that price. Rather has maintained a downward trend, leading to a depreciation of 63 per cent as at last Friday.
The stock dipped from N9.50 to N3.50, indicating a capital loss of N6 for those who bought the shares at N9.50.In terms market capitalisation, Caverton value which stood at N32 billion when it was lists, has depreciated to N11.7 billion as at last Friday.
For Seplat, some investors had enjoyed some capital appreciation before the current bearish trend. The company, which got listed at N576 on April 14, rose to N720.56 on July 2, 2014, showing a capital appreciation of 25 per cent.
However, that is where the good story ended so far as the stock has declined consistently to N3.80 last Friday.
Compared with its listing price, investors who bought the shares on the day of listing as are still holding on their investments, have recorded a 34 per cent capital loss.

In terms market capitalisation Seplat has lost N108 billion, falling from N318 billion to close at N210 billion last Friday. Although the decline is seen as usual trend in stock market investment, some market analysts said it might reflect investors’ perception of the two stocks as they appear to be disappointed by the performance of the companies so far.
For instance, Seplat posted 48 per cent decline in profit after tax for the nine months ended September 30, 2014. The company’s  PAT feel from N99.9 billion in 2013 to N92 billion.
Seplat explained that  the decrease  in profit resulted from a deferred tax liabilities of N14.4 billion  as a result of pioneer status being granted to the group, lower crude revenue in 2014 as well as N8.4 billion of one-off general and administration costs in relation to financing, regulatory, procurement and staff costs in 2014.

– This Day

In this article

Join the Conversation