Aradel Holdings closed the first half of the year with turnover of N2.5 trillion, a near sevenfold increase from N368.1 billion in the same period last year, according to its unaudited accounts published on Friday. But the company's bottom line failed to keep pace, with after-tax profit rising to N191 billion from N146.4 billion, as costs, taxes, and one-off charges eroded the windfall from higher oil prices.
The performance puts Aradel among the Nigerian energy companies riding the wave of global supply disruption caused by the US-Israeli war against Iran. The conflict, which escalated in February, has hampered crude oil flows, particularly through the Strait of Hormuz. The narrow waterway carries roughly 20 per cent of global petroleum and liquefied natural gas, making it a key chokepoint for energy markets.
Revenue and Profit: A Divergence
While the top line grew by approximately 580 per cent, net profit increased by only 30 per cent. The gap underscores the impact of a sharp rise in finance costs, which jumped to N326.1 billion from N11.1 billion, and a ballooning tax provision. Tax spending surged by 1,150.4 per cent to N561.7 billion, reflecting higher current taxes on the back of increased earnings. Profit before tax, however, leapt 293.4 per cent to N752.7 billion, showing that the tax expense was a major drag on the final figure.
Other losses also weighed on the result. The company recorded other losses of N213.1 billion, versus a gain of N8.6 billion in the previous year. Additionally, the share of profit from an associate, which contributed N71.3 billion a year ago, delivered nothing during the period. These factors combined to hold back the growth in after-tax profit.
Strong Production and Refining Output
Aradel's production metrics pointed to a major expansion. Average daily oil production jumped by 258 per cent, while average daily gas output increased by 1,121 per cent. The company derived 77.8 per cent of its revenue from crude oil exports during the review period, according to the financial statements.
Its refining business, located at the Ogbele field in Rivers State, proved to be a significant contributor. The facility, which has a capacity of 11,000 barrels of crude per day, generated N129.5 billion from the sale of refined products, an increase of 8.1 per cent from the comparable period a year earlier.
Industry Tailwinds and Peer Comparisons
The favourable pricing environment is not unique to Aradel. The war-driven supply crunch has created a windfall for many oil companies. Global giants Exxon and Chevron together reaped $26.5 billion in joint profits during the period, boosted by the conflict. In Nigeria, Aradel's rival Seplat reported a 430 per cent surge in half-year profit on Thursday, underscoring the industry-wide benefit.
However, Aradel's earnings quality was affected by the soaring costs and tax charges. Despite the headwinds, the company's EBIT margin improved to 42.4 per cent from 32.2 per cent, indicating healthier operational efficiency at the earnings before interest and tax level.
Balance Sheet Improvement and CEO Remarks
According to the CEO, Adegbite Falade, the robust price environment boosted cash generation. “A firmer price environment supported performance, generating net cash from operating activities of N975.6 billion and a closing cash balance of N1,716.6 billion,” he said in a statement on Friday. “This drove the reduction in net debt to N46.5 billion at year’s end, from N475.1 billion in the prior year.”
The significant reduction in net debt, which fell by more than 90 per cent, reflects the company's ability to convert higher revenues into cash and pay down liabilities. The closing cash balance of over N1.7 trillion provides a substantial liquidity buffer for future investments and operational needs.
Aradel's performance also reflects its expanded footprint following the completion of a majority stake acquisition in ND Western, an oil drilling firm in which it previously held a non-controlling interest. This move has broadened the company's production base and contributed to the sharp increase in output volumes.
Looking ahead, the company remains exposed to the volatility of global oil markets and the trajectory of the Middle East conflict. While high prices have been beneficial, the associated cost pressures and tax burdens could continue to temper profit growth. Investors will be watching whether Aradel can sustain its revenue momentum while managing the costs that have so far diluted its bottom line.
