Forte Oil PLC had sought to diversify away from marketing refined petroleum products towards being a purer energy and power player. The company announced in July 2015 it had signed an $83 million contract with Siemens to upgrade its 414 megawatt gas-fired power plant and that the work would be completed next year.
The company, which also has interests in fuel retailing was one of several firms to buy government power assets two years ago, sold as part of a privatization meant to end decades of blackouts in Africa’s biggest economy. Shares of the company surged on chatter about a possible stake purchase by Mercuria Energy Group Limited for a 17% stake, worth over $200 million.
Forte Oil currently has 450 retail distribution outlets for petroleum products and controls approximately 8% market share in the downstream oil and gas sector in Nigeria and 8 retail outlets in Ghana.
Mercurial, the world’s third largest independent energy traders and asset operators has been successful in its bid to acquire a 17 per cent stake in Forte Oil Plc, a Nigerian indigenous petroleum products marketer and power generating company. With this deal, Mercuria enhances its goal of becoming a more vertically integrated business in the Oil trading market and offers Forte Oil access to a global market where its goal is to become a key African player in the energy and power sector.
Both the Securities & Exchange Commission (SEC) and the Nigerian Stock Exchange (NSE) have granted approvals to this landmark transaction which should net Nigerian billionaire, Femi Otedola about $200 million estimated inflow (SP –N239.99; 52 Wk Range 141.67 – 252.00 @Sept 23, 2015). The stocks sold consist of ordinary shares held by Femi Otedola (direct) and Zenon Oil (indirect).
Mercuria is a Swiss privately held international commodity trading company active over a wide spectrum of global energy markets including crude oil and refined petroleum products, natural gas (including LNG), power, coal, biodiesel, carbon emissions, base metals and agricultural products. In 2014, the company bought the commodities trading arm of J.P. Morgan in a reported US$800 million deal. They are the third largest independent energy traders and asset operators and are based out of Geneva, Switzerland, with 50 offices worldwide. As they have expanded, they have hired away traders and investment professionals from across Europe, particularly Morgan Stanley, Goldman Sachs, Louis Dreyfus Group and Electrabel in London.
Mercuria’s 2013 revenue was US$ 112 billion.
It should be noted that back in 2011, in a move that is unclear to many existing shareholders, Forte Oil Plc, formerly African Petroleum (AP) Plc, was looking for an institutional investor that will take up 204.017 million shares of the company. Zenon Petroleum had been the core investor in the company, which changed its name from AP same year. Forte Oil has been having a rough patch in the past years, posting losses. It recorded a loss of N8.9 billion in 2009 and N2.8 billion in 2010.
This is a remarkable feat for a company with a market CAP of about N8 billion three (3) years ago now valued at N312.6 billion as at September 23, 2015.