VENTURES AFRICA – Forte Oil, a Nigerian-based oil marketing firm, has witnessed a 1,395 percent rise in its share price this year, amidst speculations that the oil company might resume payment of dividends in the near future.
Forte Oil, formerly African Petroleum Plc, began the year with a share price of N7.73 ($0.05) but has since skyrocketed to close at N115.6 ($0.73) on Tuesday, raking up profits before tax of N3.2 billion ($20.1 million) in the process.
This led the company’s Group CEO, Mr Akin Akinfemiwa to declare that the performance was reflective of a clear focus in driving business strategies that assures superior service delivery and value for investors.
However, despite the attractive growth levels recorded by the oil firm, market analysts have advised potential investors seeking quick gains to thread with caution, noting that the rise might be driven by intrinsic forces rather than actual business growth.
“Investors entering at this point with the hope of reaping fantastic returns at the end of the year should thread cautiously because the share price is already very high,” a stock dealer told Nigerian news service, ThisDay.
Reports have suggested that Forte plans to cancel 6 billion out of a total 10 billion ordinary shares to offset its N56 billion ($351.5 million) debts in accumulated losses. The debt has previously prevented the company from paying dividends.
Experts believe the proposed plan, which will allow the oil marketer to pay dividends to investors in the coming years, has been the major driver of its record-high gains in the stock market.
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