Higher Crude Prices Boost Oil Companies’ Performanc— Expert

Improved oil production and high crude prices has seen Nigeria’s oil and gas producers reporting positive growth in output and financial results.

Research Analyst at Zedcrest Investment Managers, Harrison Osagie, cited Seplat, Aradel Oando and TotalEnergies as  reporting higher earnings in the third quarter of 2026. 

Osagie, also said the firms expect strong fourth quarter as Nigeria’s production is expected to hold around 1.7 million barrels with a stable exchange rate.

He said Nigeria’s listed oil and gas companies are reporting stronger third-quarter earnings as higher crude prices support revenue, while expectations for steady production and a stable naira point to a firm finish to the year.

Seplat Energy, Aradel Holdings, Oando and TotalEnergies are among the companies benefiting from improved pricing conditions, although the impact has varied across upstream and downstream businesses. Nigeria’s oil production is expected to hold at about 1.7 million barrels per day in the fourth quarter, while a more stable exchange rate could provide additional support for earnings, Z Crest research analyst Harrison Osagie said.

“Revenue is a function of your volumes and prices,” Osagie said during a CNBC television interview. “If we speak on oil prices, of course higher prices you get to have a higher revenue, and that’s what we’ve seen.”

The earnings improvement has been driven more by the price component than by a broad-based recovery in production volumes, particularly for upstream companies. Osagie said volumes had not increased significantly across the companies under review, making higher crude prices the main contributor to revenue growth in the latest quarter.

Seplat has been one of the clearest beneficiaries of the stronger pricing environment. The company’s crude was sold at a premium of about $10 per barrel to Brent in its latest results, according to Osagie. That pricing advantage helped support revenue despite a more limited recovery in lifted volumes.

Seplat’s production has been affected by an earlier fire incident and shutdown, followed by maintenance challenges that prevented volumes from rebounding as quickly as expected in the third quarter. The analyst said the company had been expected to record a stronger recovery in output, but that operational issues continued to weigh on volumes.

Even so, the higher realized prices helped protect the company’s top line and margins. Stronger revenue typically feeds through to earnings and shareholder returns, including return on equity, although Osagie said investors were also assessing the quality and sustainability of the earnings improvement.

“Higher revenue tapers down to your margins, and when you get stronger margins, you get stronger net profits at the end of the day,” Osagie said. “Of course, that feeds into higher shareholder returns.”

Aradel has faced a different set of concerns. Osagie said the company’s latest results included what he described as accounting-related losses, with an impact of up to 520 billion naira. Those items reduced profit after tax and contributed to weaker valuation metrics and lower return on equity for the period.

The analyst argued that the market may be undervaluing Aradel’s underlying business because it has not fully reflected the company’s enlarged asset base. Aradel expanded its portfolio through acquisitions, including assets associated with OML 40 and other interests, creating the potential for greater production and revenue over time.

However, investors are seeking more detail on how those acquisitions will translate into cash flow. In particular, the market wants clearer guidance on the expected revenue contribution, the timing of production increases and the effect of the assets on operating and financing costs.

Osagie said the lack of detailed disclosure had contributed to investor caution, even as Aradel maintained its dividend policy. He added that the accounting losses should not necessarily be interpreted as a deterioration in the company’s underlying operations, but rather as an issue that investors needed to separate from the long-term value of the assets.

Oando’s balance sheet remains another area of focus for investors. The company’s expansion into the upstream sector through acquisitions has created a longer-term growth story, but the timing of those transactions coincided with a decline in crude prices, leaving pressure on the balance sheet that has persisted.

Osagie said Oando’s earlier acquisition strategy exposed the company to the effects of weaker oil prices from around 2014 onward. The company has continued to carry the consequences of those transactions, although its upstream assets provide exposure to potential production and price improvements.

The analyst also noted that Oando is not currently the operator of some of its oil assets, a factor that can affect production control, project timing and the company’s ability to directly influence operating performance. Those issues remain important as investors assess whether higher oil prices can produce a sustained improvement in cash generation.

The broader Nigerian oil and gas index has nevertheless been one of the strongest-performing segments of the local market. The index was up about 90.2% in the first half of the year, with the rally led largely by upstream names such as Seplat and Aradel.

TotalEnergies and other downstream-linked companies are benefiting from a recovery in volumes, partly supported by the Dangote refinery. The refinery has created mixed effects for marketers: it can improve product availability and volumes, but it also places pressure on margins by making companies more dependent on the prices set by the refinery.

“That creates a sort of mixed sentiment,” Osagie said. “On one hand, it helps them in volumes. But in terms of prices, it forces them to be price takers.”

Z Crest believes much of the positive outlook for upstream companies has already been reflected in share prices. Seplat was trading at about 16,000 naira per share, compared with the research firm’s fair-value estimate of roughly 14,900 naira, according to Osagie.

He said further gains could be supported by continued investor buying and increased stakes by some market participants, but cautioned that the stock’s valuation was already above the firm’s estimate. Aradel’s share price, meanwhile, will depend partly on whether the market gains greater confidence in the earnings potential of its enlarged asset base.

For the fourth quarter, investors will be watching crude prices, Nigerian production, foreign-exchange stability and disclosures on the integration of recently acquired assets. A production level near 1.7 million barrels per day and a steadier naira could support another strong quarter, but operational disruptions and balance-sheet pressures remain key risks for individual companies