Decline in turnover and volumes for Victoria Oil & Gas

The earnings of Victoria Oil & Gas, a British firm processing liquefied natural gas in Cameroon, dropped during the third quarter 2016, indicates a note published and addressed to investors. The group declared a turnover of USD 4.7 million for the third quarter ending 30 September 2016, a sharp drop compared to the USD 10.7 million over the same period in 2015.

This underperformance is explained by two points. Firstly since the end of the first semester in 2016, operational and development costs on the Logbaba site (Douala) having been fully depreciated, the revenues generated by the operation are now shared between the shareholders, thus VOG only receives 60% as its share.

Secondly, the rainy season being rather expansive for the period in Cameroon, ENEO, the company in charge of distributing electricity in the Cameroon, has become less dependent on alternative sources, which impacted on the gas sales in Cameroon for the power grid.

The British company also announced major events which could have an impact on its future income flux. It finally reached an agreement with RSM Production Corporation, the other shareholder with 40% of the Cameroonian operation, with whom it has differences of opinion on some investment projects. It announced also having progressed with the expansion of its distribution network, in the Bonabéri industrial zone. Finally, it also informed that its Logbaba installations were twice stricken by lightning, even though there were only minor effects on its treasury.

On the London stock market where Victoria Oil & Gas is listed, investors did not especially react to this announcement. There is an ongoing debate between shareholders, on the capacity of the group to generate a net positive result. Since 2011, losses have been accumulating with a record level of USD 50.7 million reached in May 2015.

These losses are however relative, considering the tax benefits offered by the Cameroonian gas code and probably the concession contract whose terms and conditions have not been made public.

The VOG stock, in this context, has been stable at 31.75 pennies. It remains at a level higher than its lowest level of the past 52 weeks (23 pennies) reached in January 2016, but also below its highest level over the same period (59.3 pennies) reached on 23 February 2016.