Energy Stocks Set to Finish 2025 as NGX’s Biggest Laggards

Energy sector is the NGX’s weakest performer in 2025, as crude oil prices remain under pressure while the reduction in gasoline imports following the ramp-up of the Dangote Refinery squeezed the margins of firms in the downstream industry.

After a stellar 2024 (where the NGX Oil & Gas index gained 170%), investors have engaged in heavy profit-taking. High-priced stocks like Oando and Aradel have struggled to maintain their earlier momentum.

As seen with BUA Foods, institutional capital is also rotating out of cyclical energy stocks and into “defensive” consumer staples that offer more predictable dividend yields in an inflationary environment.

The NGX Oil and Gas index has returned -1.33% year-to-date, compared to gains in all the other major indices, see table below.

Seplat Energy shares have gained 1.91 percent since the start of the year, underperforming the NGXASI index gains of 47.73 percent.

Aradel Holdings Plc has a year to date (YTD) return of 13.70 percent; Eterna Plc, (+17.28); Japaul Gold and Venture, (+16.10 percent).

Oando Plc, Conoil Plc, and TotalEnergies Marketing Plc, shares have not gained since the start of year as they have negative (YTD) returns of 42.42 percent; -51.65 percent, and -8.31 percent respectively.

While Crude oil prices slightly rose on Friday, it had been falling to levels not seen since the start of 2021 as a widely expected supply glut picked up momentum and peace talks in the Russia-Ukraine conflict took steps forward.

Crude Oil rose to 56.37 USD/Bbl on December 19, 2025, up 0.66 percent from the previous day.

Over the past month, Crude Oil’s price has fallen 4.46 percent, and is down 18.84 percent compared to the same time last year, according to trading on a contract for difference (CFD) that tracks the benchmark market for this commodity.

Falling oil prices means a reduction of prices at the pumps or gas stations, which is deleterious to the earnings of downstream players (oil marketers) who are struggling to compete with the Dangote Refinery who apparently controls the price of premium motor spirit popularly known as petrol.

For instance, Dangote Refinery has cut its ex-depot petrol price to N699 per, which represents a 15.58 percent reduction from N828 per litre, and marks the refinery’s 20th price adjustment this year.

It is worth noting that the 650,000-barrel-per-day Lekki facility owned by billionaire businessman Aliko Dangote has positively transformed Nigeria’s refined-product supply landscape.

Some oil marketers are feeling the pinch of the fierce competition that has taken its toll on earnings, while lower oil prices have cast a pall on recovery in earnings.

For the first nine months through September 2025, TotalEnergies revenue dipped by 26.12 percent to N587.58 billion from N793.90 billion as at September 2024. The company posted a loss after tax of N14.10 billion in the period under review from a profit of N27.22 billion.

Oando saw its revenue reduce by 20.12 percent to N2.54 trillion in the first nine months of the year as it posted an operating loss of N109.73 billion.

Conoil’s profit and after (PAT) fell by 86.86 percent to N1.46 billion as at September 2025 from N12.12 billion the previous year.

To shield itself from oil price weakness and volatility, Seplat Energy has formulated a hedging policy which helped strengthen cash flow needed to reduce debts, pay dividend, and fund the construction of wells.

The largest upstream oil and gas firm in Africa’s most populous nation completed its 2025 hedging programme during the second quarter of (2Q) 2025. It hedged a total of 5.25 million barrels (MMbbls), placed at a weighted average premium of $1.34/bbl and a weighted average strike price of $50.00/bbl.

During the third quarter (3Q0 2025, Seplat completed its first quarter (1Q) 2026 hedging programme. In 3 tranches the company hedged 6.0 MMbbls upfront premium puts hedged at an average strike price of $52.5/bbl, at a cost of $1.21/bbl.

“We note that due to increased production, we increased hedged volumes by 14 percent versus the prior quarter. Our simple put option hedge strategy is unchanged,” said Seplat.

Oil and gas hedging helps companies stabilize their cash flow and protect themselves from potential losses due to price fluctuations. The most common hedging instruments used in the oil and gas industry are futures contracts, options contracts, swaps, and collars.

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