Conoil increased borrowings while Eterna raised equity and TotalEnergies cut debt as stronger earnings met elevated financing costs

Conoil Plc, Eterna Plc and TotalEnergies Marketing Nigeria Plc took sharply different approaches to debt and capital allocation in the first half of 2026, with Conoil increasing borrowings, Eterna strengthening its balance sheet through a major equity raise and TotalEnergies reducing debt to lower financing costs.

Also read: Nigeria Oil Bid Round Wins Praise, Raises Concerns

The contrasting strategies emerged as the three Nigerian Exchange-listed oil marketers reported stronger earnings while operating in a downstream market still shaped by high interest rates, deregulation and changing petrol demand.

An analysis of their unaudited half-year financial statements showed that combined finance costs fell by 5.2 per cent to N18.51bn from N19.52bn in the first half of 2025.

The headline decline, however, concealed a striking divergence between the companies.

Conoil and Eterna recorded a combined 76.4 per cent increase in finance costs to N9.78bn from N5.54bn, while TotalEnergies reduced its finance bill by 37.5 per cent to N8.73bn from N13.98bn.

The figures underline how differently the three companies are navigating the cost of capital in Nigeria’s deregulated downstream petroleum market.

For Conoil, rising working capital requirements prompted greater reliance on debt.

Its bank overdraft increased by 31.2 per cent to N72.05bn at the end of June, compared with N54.90bn at the end of December 2025. The effective borrowing rate remained around 32 per cent per annum.

That additional leverage pushed Conoil’s finance costs up 74.1 per cent to N8.29bn from N4.76bn a year earlier.

Yet the company’s operating performance strengthened considerably. Revenue rose 25.2 per cent to N179.90bn, while gross profit increased 64.8 per cent to N18.72bn.

Profit after tax subsequently surged 473 per cent to N5.15bn.

Even so, financing consumed about 44.3 per cent of Conoil’s gross profit, compared with 41.9 per cent in the corresponding period of 2025, highlighting the pressure created by its heavier debt exposure.

Eterna followed almost the opposite path.

The company raised about N18.97bn through an equity issue, increasing its share premium from N5.80bn to N24.33bn and lifting shareholders’ equity more than fourfold to N31.53bn.

The fresh capital helped Eterna reduce total borrowings by 57.5 per cent to N29.45bn at the end of June from N69.31bn at the end of 2025.

Its finance costs nevertheless rose 90.5 per cent to N1.49bn from N782.75m. The increase reflected the fact that the company carried a higher debt burden during a significant portion of the reporting period before the recapitalisation took full effect.

Eterna’s underlying performance was considerably stronger. Revenue climbed 37.9 per cent to N217.31bn, while operating profit rose to N8.78bn from N2.34bn.

Profit after tax jumped 1,374 per cent to N5.88bn from N399m.

Its interest coverage ratio also improved markedly, with operating profit covering finance costs about 5.9 times, suggesting greater capacity to service debt following the balance-sheet restructuring.

TotalEnergies adopted a third approach by cutting its debt exposure without raising fresh equity.

Its bank overdraft declined 12.8 per cent to N73.86bn from N84.67bn, while the company added no new borrowings and repaid N10.81bn of existing debt during the period.

Its average overdraft interest rate was approximately 18 per cent, substantially below Conoil’s effective borrowing rate.

The lower debt burden helped TotalEnergies reduce finance costs by 37.5 per cent to N8.73bn from N13.98bn.

Revenue increased more modestly by 4.7 per cent to N443.99bn, but operating profit climbed 40.8 per cent to N14.52bn from N10.32bn.

After recording a loss of N2.86bn in the first half of 2025, TotalEnergies returned to profit with profit after tax of N4.95bn.

Interest coverage also improved to 1.66 times from 0.74 times a year earlier.

The different financing decisions reflect the varied balance-sheet positions and funding options available to the companies rather than necessarily indicating sharply different expectations about the downstream market.

Afrinvest Managing Director Abiodun Keripe said the divergence reflected differences in capital structure, liquidity, shareholder support and management risk appetite following the deregulation of Nigeria’s downstream sector.

“The divergence largely reflects each company’s capital structure, liquidity position, shareholder support, and management’s risk appetite following the deregulation of Nigeria’s downstream sector,” Keripe said.

He noted that companies with stronger access to equity capital had greater scope to reduce leverage and preserve financial flexibility in an environment where borrowing remains expensive.

“Investors are assessing whether earnings growth is supported by sustainable cash flows or driven by increased financial leverage,” he added.

Keripe said companies reducing debt and finance costs were likely to attract greater confidence because lower financing burdens could improve the quality of reported earnings and strengthen balance-sheet resilience.

Companies increasing borrowings, he said, would instead be judged on whether the additional debt was generating returns comfortably above the higher cost of capital.

Vice President of Highcap Securities David Adonri also pointed to the working-capital demands of the downstream petroleum business as an important factor behind the financing patterns.

“A lot of these energy companies, especially those that are in marketing, require short-term working capital finance,” Adonri said.

He explained that marketers often rely on bank facilities and commercial paper to finance inventory before selling products to customers, making short-term financing a normal feature of their balance sheets.

On the three companies specifically, Adonri described TotalEnergies as an example of a business scaling down its debt obligations, while Eterna used an equity issue to refinance short-term liabilities and reduce its exposure to borrowing costs.

“Conoil appears to rely principally on debt finance for its working capital,” he said.

The financing decisions are taking place against a broader shift in Nigeria’s petroleum market.

Petrol consumption has shown signs of moderation following higher pump prices after the removal of fuel subsidies, even as domestic refining capacity has increased.

Data analysed earlier in 2026 showed petrol consumption at about 4.93 billion litres in the first quarter, although monthly volumes declined sharply from January to March.

That changing demand environment adds another layer of uncertainty for marketers, whose profitability depends not only on margins but also on their ability to maintain product availability and manage inventory efficiently.

Adonri warned that supply disruptions could be particularly damaging for companies carrying substantial short-term financing obligations.

“If petroleum products are not available, they have nothing to sell. At the same time, interest on borrowings continues to accumulate,” he said.

“That is double jeopardy because there is no income from sales while financing costs continue to rise.”

He argued that reliable domestic supply arrangements with refineries would therefore be important for reducing the financial risks faced by petroleum marketers.

The companies’ first-half results also illustrate the importance of distinguishing between stronger accounting profits and the quality of those earnings.

Conoil delivered a dramatic improvement in profit despite a sharp increase in finance costs, while Eterna’s exceptional profit growth coincided with a major balance-sheet recapitalisation. TotalEnergies, meanwhile, benefited materially from the reduction in its financing burden.

The three approaches are likely to remain closely watched by investors as interest rates, fuel demand and domestic refining capacity continue to reshape the downstream market.

Eterna’s equity-led restructuring offers a route to lower leverage, while TotalEnergies’ debt reduction demonstrates the earnings benefit that can come from reducing financing costs.

Conoil’s strategy, by contrast, places greater emphasis on debt-funded working capital and therefore leaves the company more exposed to movements in borrowing costs.

The results do not establish that one strategy is universally superior. Instead, they show how Nigerian oil marketers are making different capital allocation choices in response to the same challenging market.

Also read: Nigeria Oil Revenue Decline Hits Fisc al Stability Hard

For investors, the critical question going forward may be whether each company can convert its chosen funding strategy into sustainable cash flow, stronger margins and sufficient returns to justify the cost and risk of its capital.