Breakfast Report - 13 December 2016
​According to the NNPC Financial and Operations Report for October 2016, oil production for September inched up to 1.65 mbpd, compared to a low of 1.50 mbpd recorded in August. However, this still compares unfavorably with 2.20 mbpd recorded in September 2015. Meanwhile, October data revealed that average daily natural gas production hit 7.08 bscfd (September: 6.83 bscfd) which eventually translated to power generation of 2,473 MW from gas-fired power plants. On another note, capacity utilization in domestic refineries hit a year-high of 23.5% in October (September: 13.89%) mostly due to better-than-expected utilization in the Warri Refinery, even as all refineries were utilized during the month – only the fourth time this happened so far this year. With regards to finances, $97.3 million was accrued by the Federal Government in export proceeds for October (September: $115.6 million), representing a multi-year low following a plunge in crude oil export receipts ($73.7 million in September to $18.9 million in October). Finally, NNPC intimated that there was a 56% drop in the number of vandalized pipeline points to 101 in October whilst stressing its intention to establish a specialized petroleum force to ensure zero vandalism in 2017.
NNPC data also highlighted the impact of the ongoing Force Majeure on the Forcados terminal. In September, and for the first time this year, there was no production of the Forcados Blend as the shutdown continues to hamper production in the terminal. Furthermore, production from Qua Iboe (traditionally the highest-producing stream) remained depressed with Qua Iboe light accounting for just 1% of September oil production (January 2016: 16%).
The Nigerian equity market traded choppy in the previous week with the NSE ASI closing 30bps up on the back of gains at week close. Whilst the Energy sector logged a positive w/w return of 774bps after a week-long limit up close in FO outweighed profit taking in MOBIL, the Industrial Goods sector led the laggards, posting a negative w/w return of 333bps with WAPCO contributing the most losses.
We expect last week’s mixed trading to persist this week as investors remain quick to take profit whilst seeking bargains for beaten-down stocks.
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