IIARD International Institute of Academic Research and Development

International Journal of Engineering and Modern Technology (IJEMT )

E-ISSN 2504-8848
P-ISSN 2695-2149
VOL. 8 NO. 4 2022
DOI: https://doi.org/10.56201/ijemt.v8.no4.2022.pg56.73

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Debt Financing and Performance of Indigenous Oil and Gas Operators: Some Selected Marginal Fields in Nigeria

Otonye Spiff, Boniface Oriji, Edwinah Amah

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Abstract

The objectives of marginal fields were amongst other factors to create wealth, stimulate indigenous participation and increase government revenue from oil and gas. Several challenges have hindered the potential role of marginal field development and inadequate finance is a major setback. This study analyzed the relationship between debt finance and the performance of marginal oil fields in Nigeria. Feasible generalized least square and Panel spatial correlation consistent fixed effects methods were used to analyze data from 2011 to 2021. Return on Asset (ROA) and Return on Equity (ROE) were performance measures used as explained variables. Debt indicators are long term debt and short-term debts. Size and taxation were control variables. Findings show long-term debt and short-term debt have inverse and significant impact on performance. Equity was preferred by indigenous oil and gas companies to debt finance, as high debt policy results in lower performance. The study recommends shareholders and managers of marginal fields to focus on strategic debt policy that will enhance their access to finance and increase firms’ values.

keywords:

Debt financing; firm performance; marginal oil fields; ROA; ROE

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