Abstract:
The increasing operational costs due to oil spills, crude oil theft, illegal refining and sabotage of facilities, kidnapping, onshore and offshore piracy in parts of the Niger Delta, high and unprecedented interest charges due to late payment of subsidies that deplete their profit beyond any one company's control, is of significant concern. Thus, the study explored the effect of corporate strategy on the performance of oil and gas firms in Nigeria to enable them formulate and implement appropriate strategies to continue to make reasonable profits. Ex post facto research design was used. Cross sectional data were sourced from financial statement and annual reports of the oil and gas firms from 2005 to 2018. Profitability was proxy for dependent variable while product diversification, investment diversification and business diversification were proxies for the independent variable. R-square, regression co-efficient, Durbin Watson statistics, F-probability and T-statistics were used to determine the effect of corporate strategy on the profitability of oil and gas firms. Findings of the study revealed that 71 percent and 50.9 percent of the total variations in the profitability of the oil and gas firms is accounted for by the explanatory variables. From the regression coefficient, it was evidenced that product diversification and business diversification have positive effect on the profitability of the oil and gas firms in Nigeria while investment diversification has negative effect on the profitability of the oil and gas firms. From the student t-test, the study found investment diversification as statistically not significant while product diversification and business diversification are statistically significant. The study concluded that product diversification and business diversification have significant positive effect on profitability while investment diversification has a negative significant effect. The study recommended that corporate strategies such as product diversification be integrated with the objective of increasing performance of the oil and gas firms in Nigeria.
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