The Managing Director of Aradel Holdings Plc, Mr. Gbite Falade, has stressed the need for other indigenous oil and gas companies to prioritise increasing their revenue generation by removing the ‘above-ground’ challenges that increase their costs.
Falade said the strategy has helped Aradel to attain its robust financial position as seen in its performance over the years, leading to its listing on the Nigerian stock market.
Falade, whose company is part of the consortium that formed Renaissance Africa, now owner of the Shell Petroleum Development Company (SPDC) in Nigeria, gave the advice in Abuja while contributing on a panel at the recently held 8th Nigeria International Energy Summit (NIES).
Alluding to the gap between Nigeria’s technical allowable oil production of 2.2 million barrels per day and the current 1.7 million bpd announced by the Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), he said that the variance was due to the above-ground issues.
He said tackling those challenges and unblocking the potential in the business may lead to the quickest path to cash generation for oil companies and the country at large..
“Cash generation is very key. We have assets to develop but we’ve got a business to run and that business rises and falls on cash. So everything we can do to remove the above-ground challenges that limit cash generation should be areas of priority.
“The NUPRC chief executive spoke earlier about the gap between the technical allowable production capacity of 2.2 million and what we’re currently doing today. That variance is due to the above-ground issues and there are moments where just going after those things and unblocking them may just be your quickest path to cash generation.
“In our case, what we did was integrate and create multiple evacuation paths to the market for each of our product streams. Whether we’re speaking about oil or we’re speaking about gas, we created those redundancies both physically and in terms of market classification. What that did was to enable cash that can then be leveraged for development,” Falade explained.
Highlighting the importance of strong corporate governance to the success and survival of organisations, the Aradel boss pointed out that any indigenous company thinking of migrating to being listed in the capital markets must take corporate governance very seriously both in word and in deed.
According to him: “You can’t do that without very strong corporate governance because that’s the strongest signal to investors that the investment is safe. You need the track record as you build it on and all of that put together will help in that journey.”
Also, as Nigeria aspires to become a trillion dollar economy by 2030, Falade warned that the country can’t achieve that outside of the Nigerian stock exchange, and called for more energy companies to be listed.
Today, he said the total market capitalisation of the Nigerian stock exchange is barely $45 billion equivalent.
SOURCE: THISDAY
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