After a stellar performance in 2024 that saw the NGX Oil & Gas Index soar by 170 percent, outperforming all other indices on the Nigerian Exchange Limited (NGX), the sector is now facing a harsh reality. A mix of delayed dividend payouts, unimpressive 2024 unaudited financials, and investor skepticism has seen the index plummet by 7.82 percent year-to-date (YTD) as of March 21, 2025, making it the worst-performing index so far this year.
The downturn in the Oil & Gas sector has outpaced declines seen in other struggling indices. The NGX Insurance Index has also suffered a 4.51 percent YtD decline, while the NGX Industrial Goods Index has slipped by 2.31 percent. However, none have witnessed a collapse as sharp as the Oil & Gas stocks, raising concerns over what lies ahead for the sector.
From Market Darling to Worst Performer
The Oil & Gas sector had emerged as the star performer of 2024, benefitting from government reforms and regulatory adjustments that spurred a rally in stock prices. However, 2025 has been a different story altogether. The same investors who had rushed to grab oil stocks last year are now exiting, discouraged by delayed dividend payouts and lackluster earnings.
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This downturn is not entirely new to the sector. Historical data shows that negative returns have been a recurring theme for Oil & Gas stocks in previous years. The index had declined by 8.61 percent in 2018, 14.6 percent in 2019, 13.03 percent in 2020, and 8.73 percent in 2021 before a 98.3 percent surge in 2023 set the stage for its historic 170 percent rally in 2024. But with that rally now in the rearview mirror, the sector is grappling with a harsh correction.
Investors’ Patience Wears Thin as Stock Prices Tumble
An analysis of trading data for 2025 paints a grim picture for Oil & Gas stocks. Of the seven listed companies in the sector, only Eterna Plc has posted gains, while the others have seen significant price drops.
Eterna Plc emerged as the sole bright spot, surging by 56.4 percent YtD, closing at N38 per share from N24.30 per share in 2024. Seplat Energy Plc, despite posting a relatively strong 2024 performance, has traded flat at N5,700 per share since last year. MRS Oil Nigeria Plc has suffered a 25.6 percent YtD decline, tumbling from N217.8 per share to N162.00 per share. Oando Plc has seen its stock price crash by 22.7 percent YtD, plunging from N66.00 per share to N51.00 per share, wiping out an estimated N186.47 billion in market value. Conoil Plc has not been spared, shedding 14.46 percent YtD to settle at N331.20 per share, down from N387.2 per share in 2024. Aradel Holdings Plc has declined by 12.7 percent YtD, trading at N522.00 per share, down from N598.00 per share in 2024. TotalEnergies Marketing Nigeria Plc has also struggled, dropping 8.7 percent YtD from N698.00 per share to N637.00 per share.
What’s Behind the Selloff? Analysts Weigh In
Market experts have pointed to a combination of factors driving the decline in Oil & Gas stocks, particularly the delayed filing of 2024 audited results and uncertainty surrounding dividend payouts.
According to David Adnori, Vice President of Highcap Securities Limited, much of last year’s rally was driven by Oando Plc and Aradel Holdings, which saw their stock prices surge. However, both companies have since taken a serious hit.
“Oando’s stock price appreciated significantly in 2024, and when Aradel Holdings was listed, its high entry price drove the index’s growth,” Adnori explained. “However, since the start of 2025, both companies have seen sharp declines, dragging down the entire NGX Oil & Gas Index.”
TotalEnergies, which had been a key player in last year’s rally, also failed to maintain momentum, largely due to its underwhelming Q4 2024 earnings report.
“The NGX Oil & Gas Index’s poor performance has more to do with the listed companies rather than the industry itself,” Adnori added. “Investors lost confidence in Oando, Aradel Holdings could not sustain its high price after migrating from NASD to NGX, and TotalEnergies underperformed in the last quarter.”
Oando’s Dividend Strategy Sparks Investor Exodus
Beyond earnings, one of the biggest sources of investor frustration has been Oando’s dividend strategy.
According to Aruna Kebira, Managing Director of Globalview Capital Limited, the company’s decision to structure its bonus share issuance over three years instead of the usual 90-day payout period was not well received by shareholders.
“Oando proposed a bonus of one new ordinary share for every 12 existing shares, but the catch was that this would be credited over a 36-month period,” Kebira noted. “Investors saw this as a move to string them along for too long, and many opted to sell their shares instead.”
Kebira also pointed out that investors feared dividends from other listed Oil & Gas companies may not be substantial enough to justify their current market prices.
“Investors believe that the dividend payments from these companies will not be commensurate with their stock prices, so they are exiting ahead of the announcements,” he explained. “It’s better for them to sell now before the dividend declarations confirm their fears and trigger a rush to the exit.”
Global Oil Market and Trump’s Policies Weigh on Sentiment
Beyond domestic factors, global oil prices and political developments have also played a role in dampening enthusiasm for Nigerian oil stocks.
According to Moses Igbrude, National Coordinator of the Independent Shareholders Association of Nigeria (ISAN), investors have been cautious amid fluctuating oil prices and uncertainty over President Donald Trump’s policies on energy and trade.
“Investors are trading Oil & Gas stocks with caution because of uncertainty surrounding global oil prices,” Igbrude said. “Trump’s policies have been unpredictable, and that is sending mixed signals to the market.”
However, he believes the upcoming 2024 audited results will be a key turning point.
“The 2024 audited results will tell investors which stocks will appreciate,” Igbrude added. “Dividend payouts for 2024 will be crucial in determining whether investors hold onto or dump Oil & Gas stocks. Right now, what we are seeing is a market correction after last year’s surge.”
Can the Oil & Gas Sector Rebound?
Despite the current turbulence, analysts remain cautiously optimistic that the sector could see a turnaround later in 2025, depending on a few critical factors. The release of 2024 audited results will determine whether investors regain confidence in the sector. Dividend payouts will play a crucial role in shaping market sentiment—if companies are surprised with strong dividends, a rebound could be on the cards. Global oil price stability and clarity on U.S. energy policies could ease some of the uncertainty weighing on the sector.
The NGX Oil & Gas Index remains in a steep decline for now, with no immediate signs of recovery. Investors are bracing for further turbulence as they await the audited financial results that could either trigger a rebound or deepen the selloff.