Strap in as we take you on Sasol’s rollercoaster 2020.
A steep turn and a frightening downward slope
The rollercoaster ride all began on the 9th of March, when Sasol’s share price took a major fall by nearly 47% after news broke that the oil price had dropped over 30% after OPEC, the oil producers’ cartel, failed to reach an agreement on production levels.
Just a few days later, the company released a SENS announcement on the 12 March, where Sasol announced it was reviewing a variety of actions to address the challenges created by the impact of COVID-19 and the decline of the oil and chemical prices.
Relief settles in as the rollercoaster slows down with a potential end in sight
The downfall of the company’s share price slowed down even with the announcement that Sasol began seeking a buyer for the Lake Charles Chemical Project. The intention to sell the project highlighted the company’s struggles with its debt. The project was originally taken on in a move to become a global operator and diversify away from oil. The cost of LCCP increased from $8,9 billion to almost $13 billion. The oil price crash threatened the company’s revenue resulting in the company being pushed to the brink and it needed to recover quickly.
Sasol began to renegotiate with its lenders, made significant progress with its crude oil hedging programme and undertook an essential maintenance shutdown. In addition the company announced in a statement that it will be discontinuing its oil growth activities in West Africa as part of a review of its business and associated workforce structures.
The Sasol share price powered upwards after its plummet earlier in the year on the back of oil price increases, with investors believing that the punishment in share price was overdone.
Should passengers disembark?
Amidst the company’s announcement that it will begin dismissing employees from mid-August as part of its cost cutting strategy to boost its balance sheet, and the pending annual financial results Sasol has staged a remarkable recovery on the JSE.
Sasol continues to be the most watched stock on JSE. While we wait for its financial year end results next week vote in our poll. Are you selling your shares or keeping them? VOTE HERE