Aradel Holdings Plc delivered one of the strongest earnings performances in Nigeria’s oil and gas sector in the first quarter of 2026.
The company posted a triple-digit growth in revenue, profit and production following the expansion of its asset base.
Its revenue surged by 265 per cent to ₦728.5 billion, from ₦199.9 billion a year earlier, while profit after tax rose 252 per cent to ₦120.3 billion.
Similarly, its production jumped 672 per cent to 141,118 barrels of oil equivalent per day, driven largely by the consolidation of ND Western Limited and the company’s majority interest in Renaissance Africa Energy Company Limited.
While numbers paint the picture of a company enjoying the rewards of a transformative acquisition, a deeper look into the financial statements reveals several issues that investors may find difficult to ignore.
The biggest surprise is that despite reporting a profit after tax of ₦120.3 billion, Aradel ended the quarter with a total comprehensive loss of ₦111.4 billion.
Pinnacle Daily’s analysis of the financial statements shows that the reversal was caused by a foreign currency translation loss of ₦233.9 billion.
In simple terms, exchange-rate movements wiped out the company’s reported profit when the financial results of the enlarged group were consolidated.
This means that while Aradel generated substantial profits from its operations, currency-related adjustments significantly reduced the value created for shareholders during the quarter.
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The balance sheet also shows the growing financial obligations that came with the company’s rapid expansion.
Aradel reported a contingent consideration liability of ₦1.37 trillion, representing potential future payments tied to the performance of newly acquired assets or agreed milestones.
In addition, the company carries decommissioning liabilities of about ₦1.4 trillion, reflecting future obligations related to asset retirement and environmental restoration.
Overall liabilities stood at ₦7.16 trillion, compared with shareholders’ equity of ₦1.89 trillion, highlighting the scale of obligations now sitting on the company’s books.
The cost of financing this growth is also becoming increasingly visible, as net finance costs surged to ₦89.1 billion during the quarter, compared with just ₦1.2 billion in the corresponding period of 2025.
Gross finance costs reached ₦101.8 billion, reflecting increased borrowing associated with the enlarged group.
While operating profit climbed sharply to ₦372.9 billion, a significant portion of those earnings was absorbed by interest and financing expenses.
Another less visible aspect of the results is the role of non-operating items in boosting profitability.
The company recorded ₦208.9 billion in other income during the quarter, which helped drive the 487 per cent increase in operating profit.
The company also benefited from the reversal of ₦20.5 billion in provisions that were no longer required, as well as positive stock adjustments worth ₦29.3 billion.
Meanwhile, strong operating cash generation was accompanied by major cash outflows linked to the company’s expansion strategy.
Aradel recorded an outflow of ₦182.7 billion for Gas SPV Collection and SPA-related balances, while earnout payments consumed another ₦71.9 billion.
In addition, ₦142.5 billion was paid as dividends to non-controlling interests during the quarter, revealing that not all of the earnings belong to Aradel shareholders.
Of the ₦120.3 billion profit after tax reported during the period, only ₦66.2 billion was attributable to equity holders of the parent company.
The remaining ₦54.1 billion belonged to non-controlling interests, reflecting the company’s partnership structure within ND Western and Renaissance.
This means that nearly 45 per cent of the quarter’s profit is ultimately shared with minority partners rather than flowing directly to Aradel shareholders.
Operationally, the company also faced challenges in its refining business.
While crude oil and gas production rose sharply, refined product output fell by 21 per cent to 698.3 kilolitres per day.
The decline was attributed to feedstock constraints, offtake challenges and operational issues.
Despite these concerns, management remains optimistic about the outlook.
The Chief Executive Officer, Adegbite Falade, commented, “Aradel Holdings’ first quarter results mark an important milestone — the first full quarter in which the earnings and cash flows of our enlarged Group are reflected in our financial statements, following the consolidation of NDW as a subsidiary and our resulting majority interest in Renaissance.
“Production tripled to 12.9 mmboe, and cash generated from operations rose by 27x to ₦868.3 billion. Revenue of ₦728.5 billion and profit after tax of ₦120.3 billion demonstrate the strength of our diversified portfolio across upstream, gas, and refining and the immediate benefits of our expanded asset base.
“Our focus for the rest of 2026 is to optimise our existing asset base, improve operational efficiency, increase production, and further diversify our revenues.”
Alex is a business journalist cum data enthusiast with the Pinnacle Daily. He can be reached via ealex@thepinnacleng.com, @ehime_alex on X