Oil and Gas Firms To Lose Equities Over Large Debt - FBN Capital Reveals

Vice President, FBN Capital, Rolake Akinkugbe has stated that oil and gas firms in the country that borrowed huge amount sums at high interest rates from financial institutions would be forced to relinquish some of their stakes to the banks if they intend to continue in business.

 

Akinkugbe, in an article, 'The Oil and Gas Year' warned that marginal fields’ operators that are yet to commence production on their fields will be the worst affected.

 

She said, “Assets that were purchased during the industry’s up-cycle will be most heavily impact by low oil prices. “For Nigerian companies that have taken on significant debt at heavy interest rates, parceling out more equity than envisioned may be necessary to stay afloat. This is particularly relevant for non-producing marginal field operators that have licences on the cusp of being revoked.”

 

According to her, some of the marginal fields’ owners will need to de-risk completely and optimise production where possible, adding that attention will also be directed at improving corporate governance and transparency, in order to attract investors, even as they take advantage of local content opportunities.