Aradel returns to net cash position as EBITDA hits N2.1tn

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Aradel Holdings Plc generated N2.46tn in operating cash flow in the first nine months of 2026, moving from a net debt position of N475.1bn at the end of last year to a net cash position of N532.3bn in September.

The improved cash position came as the energy group recorded higher production and revenue following the full consolidation of ND Western and Renaissance operations, although a large acquisition-related earnout charge significantly reduced its reported profit.

In its unaudited results for the nine months ended 30 September, 2026, Aradel reported revenue of N3.95tn, up 633 per cent from N538.8bn in the corresponding period of 2025.

Earnings Before Interest, Taxes, Depreciation and Amortisation rose by 703 per cent to N2.1tn from N261.5bn, while its EBITDA margin improved to 53 per cent from 49 per cent.

The group’s average production increased by 502 per cent to 144,700 barrels of oil equivalent per day from 24,000 barrels in the previous year.

The company said the nine-month production level had exceeded its previous full-year guidance of between 110,000 and 140,000 barrels of oil equivalent per day. It consequently raised its 2026 production forecast to between 140,000 and 150,000 barrels per day.

Crude oil production averaged 57,900 barrels per day, representing a 279 per cent increase, while gas output rose by 895 per cent to 503.6 million standard cubic feet per day.

Aradel attributed the increase in gas production to expanded processing capacity, improved pipeline availability and sustained demand from customers.

Despite the improvement in operating performance, the company’s profit after tax fell to N43.3bn from N245.1bn a year earlier.

Profit attributable to shareholders of the company stood at N141.5bn, compared with N242.9bn in the corresponding period of 2025. The group reported a negative N98bn minority interest.

The company said its reported earnings were affected by a N529.1bn charge relating to the earnout arrangement arising from Renaissance’s acquisition of Shell Petroleum Development Company.

The earnout is a contingent payment to the seller of SPDC, calculated by reference to net revenues from a defined group of assets within Renaissance.

Aradel said the charge was recognised under finance costs and raised the group’s effective tax rate. The contingent consideration liability stood at N1.32tn as of 30 September, after cash payments of N543.9bn during the period.

The company said it was engaging the seller, alongside other Renaissance shareholders, to address what it described as an imbalance in the earnout arrangement following developments after the transaction was signed.

Excluding adjusting items, profit after tax attributable to Aradel shareholders was N572.4bn, representing a 134 per cent increase from the prior year.

The group’s operating profit rose by 832 per cent to N1.56tn, supported partly by N253.1bn in other income, mainly fees earned from third-party use of its crude oil evacuation infrastructure.

However, net finance costs increased sharply to N797.3bn from N6bn, reflecting interest on the borrowings of the consolidated businesses, the unwinding of decommissioning provisions and the earnout charge.

Aradel’s cash generation also supported a reduction in total borrowings, which fell by 25 per cent to N1.51tn from N2tn at the end of December 2025.

Cash and cash equivalents increased by 33 per cent to N2tn, while the company used funds generated during the period to finance capital expenditure of N570.6bn, debt repayments and interest of N580.5bn, and earnout payments of N543.9bn.

The group also declared an interim dividend of N7 per share, amounting to approximately N30.4bn, compared with N10 per share paid for the corresponding period of 2025.

The board said the dividend reflected the company’s cash generation and improved balance sheet, while taking account of capital expenditure commitments, debt service and other obligations.

Despite the strong production performance, refined product output declined by 18 per cent to 194.2 million litres, from 235.7 million litres in the same period last year.

Aradel attributed the decline to limited feedstock availability, evacuation challenges and planned maintenance in the first half of the year. Refinery utilisation stood at 45 per cent.

Output, however, improved to 68 million litres in the third quarter, compared with 67.5 million litres in the second quarter and 58.7 million litres in the first quarter.

The company’s unit field operating cost also declined by 28 per cent to $7.9 per barrel of oil equivalent, from $11 in the corresponding period of 2025.

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