Abstract
This study examines the cost implications of environmental activities as they effect profitability of oil and gas companied in Nigeria. In the past, natural resources was considered a free good; but the position has recently changed. The study employed the survey research design, the primary data source was used through the administering of questionnaires. The data obtained from the questionnaire were analyzed using the Ordinary Lease Square (OLS) model. The result revealed that there is positive relationship between environmental activities and profitability of oil and gas companies in Nigeria. Based on the above findings, it was therefore concluded that proper management of environmental activities is desirable if organizational profitability is expected to be sustained. Secondly, oil and gas companies that ignores their responsibility of environmental conservation cost stand the risk of losing income through fines and penalties paid for such offenses, finally, it was recommended that the Nigerian Petroleum Companies should state, data in environmental expenditure, environmental cost charged to income in their final accounts. To enhance effectiveness of this policy, separate accounts should be prepared for environmental expenditure and companies performance in the oil and gas sector.