THE COMPANY: Ghana Oil Company (GOIL) is a public company, listed on the Ghana Stock Exchange, controlled by the government of Ghana with a 51.1% stake. GOIL is one of the “big three” oil and gas marketing companies in Ghana. The company’s product offering includes the marketing of gasoline, gasoil, liquefied petroleum gas (LPG), lubricants, bitumen and speciality products. GOIL has maintained its dominance in the industry through an extensive distribution platform spanning over 220 outlets. In 2012 GOIL sold a combined liquid fuel and LPG volume of 457m litres, representing a 12% share of the market. The company currently holds the market leadership position in the distribution of gasoil, gasoline, LPG and marine fuel (MGO). In 2010 the company embarked on a re-branding exercise geared towards strengthening its position in the country’s downstream petroleum market. As part of this exercise, the company renovated some of its old outlets and changed its logo to a more modern and appealing image in 2012.

GOIL’s wide distribution network and improved brand image led to an 11% growth in sales volumes in 2012, recovering strongly from the 1% rise recorded during 2011. This volume growth resulted in a 28% increase in revenue in 2012. The company’s operating expense ratio in 2012 remained in the mid-60s, as it had in 2011. Strong revenue growth and sustained operational efficiency resulted in a 19% jump in net profit to approximately GHS10m ($5.14m) versus GHS8m ($4.1m) in 2011. The company undertook substantial capital expenditure of GHS20m ($10.3m) in 2012 due to its rebranding exercise and construction of new service stations. This capital expenditure was largely financed by a medium-term loan. GOIL’s share price rocketed during 2012, recording a gain of approximately 94% for the year. This stellar stock price performance was largely driven by repeated rounds of block buying by local strategic investors, at ever-increasing prices, as competitive positioning within the country’s mid- and down-stream petroleum sector gathered momentum.

DEVELOPMENT STRATEGY: GOIL’s strategy is to position itself as a Ghanaian-owned company with market leadership position across all fuel segments. GOIL seeks to maintain its status as one of the country’s flagship companies with continued significant government and local institutional and retail investor participation.

GOIL plans to capture more market share via increasing its retail presence and reaping the benefits of its rebranding exercise. An expansion of its distribution channels, targeting strategic commercial points, is expected to make its service stations more accessible to consumers. The rebranding exercise is also expected to strengthen GOIL’s leadership position in the downstream petroleum industry. The improved brand has renewed consumers’ confidence and loyalty to the brand and, anecdotally, has boosted sales.

In 2011 GOIL formed a joint venture with Chase Petroleum Ghana, a bulk distribution company, to rehabilitate, expand and operate its fuel storage depot at Takoradi in the Western Region. The completion of the depot will help lessen the company’s procurement and supply challenges. The company reports that significant progress has been made on the ongoing rehabilitation works, including repairs of leaking tanks and an increase in diesel storage capacity.

GOIL has entered into technical and commercial agreements to expand its presence in the international aviation fuel market. The company expects to receive the required international certification during 2013. To enhance its competitiveness in this market, the company has commenced the training and development of its workforce in the aviation fuel business.

The company has publicly disclosed that it is contemplating an equity fund raise via a rights issue. This injection of equity capital would further reduce gearing and provide the capital to fund GOIL’s growth strategy. The growth strategy will sustain sales growth through improvements to its distribution network, novel branding efforts and further penetration into fuel segments with demonstrable growth potential. GOIL price & index relative performance GOIL market ratios