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Breakfast Report - 24 December, 2017

According to the 2019 crude loading program, shipment of Egina crude from Total’s Floating, Production, Storage and Offloading (FPSO) vessel would begin in February. Bloomberg reports that the initial shipment will be around 100,000 bpd with production expected to ramp up quickly, possibly doubling in months. The Egina FPSO is Nigeria’s latest large-scale investment in the upstream energy sector and is poised to add c.200,000 bpd to the crude oil sector, a welcome development considering that Nigeria’s 2019 budget is hinged on a production of 2.3 million bpd (2018 ytd average: 1.93 million bpd). Whilst this increased output is in conflict with OPEC’s latest round of cuts, which caps Nigeria’s 2019 production at roughly 1.7 million bpd, we note that Nigeria could fully comply with the cuts, while ramping up on condensates production. We estimate a 2.0 million bpd total crude output in 2019, supported by a base condensates projection of 0.3 million bpd.                                       

Equity: In spite of a 9bps moderation on Friday and mixed market performances through the week, the All-Share Index ended the week 33bps up, the first positive w/w close since 9th November 2018. With more visible bargain hunting on the exchange, we anticipate a slightly positive start to this week’s trading as investors continue to snap up down trodden stocks.                                          

Stock Watch: UNITYBNK was on an uptrend last week with four consecutive positive sessions, gaining 39% w/w to settle at ₦0.96. The stock currently trades at 81% above its year open price, outperforming the banking sector (-15%).                                        

Fixed Income: The CBN sold ₦560 billion in OMO auctions last week, including ₦196 billion at a special OMO last Thursday. We expect the CBN to resume with liquidity mop-ups next week and foresee slowdown in demand at the secondary FI market next week.