Caverton remains profitable amid downturn in oil and gas sector

Caverton Off Shore Support Group (COSSG) Plc Africa has remained profitable amid slowdown in business activities in the oil and gas space as the company is aggressively diversifying its revenue base   with a view to increasing its share of the market.

Analysts opined that the fall in oil price which hit major oil and companies hard impacted on the top lines of Carveton as the company’s valued customers are in the oil industry.

“Whilst 2015 was a tough year in the oil and gas space, we are cautiously optimistic that the persisting oversupply in the industry is not sustainable; our view is that oil prices will stabilize by the second half of the year based on recent trends which will be positive for our operations within that space,” said Bode Makanjuola, the Group CEO of the company while commenting on the first quarter results.

Makanjuola further explained that the company is working tirelessly to broaden its service offerings through diversification into other sectors, as well as geographically into newer markets in a bid to boost its non – oil and gas revenues.

He stated that “in the quarter, we successfully signed a new 5-year contract for helicopter management services which highlights our ongoing diversification efforts.”

“Overall, our strategy is to remain diligent in our operations by offering cost effective offshore support logistics services to a broad range of clients without compromising on our safety standards,” the CEO added.

COSSG sales were down by 26 percent to N4.4 billion in March 2016 on the back of a slow growing economy. Operating profit also suffered a hit as it reduced by 14 percent to N538 million.

The company also recorded a net debt of N11.5billion down 6% from 31st December, 2015 and EPS flat at N0.03.

The company disclosed that there is reduced demand for offshore support activities in the oil and gas space but they continue to boost their efforts in diversifying their services to other sectors of the economy.

“We are also making steady progress with the construction of our new Maintenance, Repair & Overhaul facility (MRO) at our Ikeja base; timeline for delivery of the MRO is still on track for end of 2017,” Makanjuola said.

Indeed 2015 was a horrendous year for the economy of operating in Africa’s most populous nation as a 60 percent drop in price of oil to $45 depleted reserves and stoked inflation.

As a result of the aforementioned lethargy, companies in the oil and gas sector lost significant revenues because assets were acquired when oil prices were high.

Economic growth slowed to 2.8 percent, the lowest in a decade while inflation rose to 12.8 percent in March from 11.4 percent in February.

COSSG was efficient amid a tough and unpredictable macroeconomic environment it remains one of the fastest growing indigenous shipping companies in the country.

The group’s focus and primary business continues to be to provide logistics and environmental support services to oil and gas fields with broader plans to support energy operations along the West

African shelf as well as other ancillary support services.

The group also maintained a 0.00 Air Accident Rate in the quarter as it continue to enforce its international safety standards

Caverton has a young and growing fleet of vessels and aircraft operating out of nine locations. The company has an impressive client base which includes Shell, Total, ExxonMobil, Folawiyo

Aje Services and NNPC, among others.

Ifeoma Okeke