Aradel posts N764bn pre-tax profit but earnout charge crashes net income to N43bn
Aradel Holdings reported a 154% jump in nine-month pre-tax profit to N764.71 billion, driven by revenue surging 633% to N3.95 trillion after full consolidation of ND Western and Renaissance operations. Production jumped 502% to 144,700 barrels of oil equivalent daily, prompting management to raise full-year guidance to 140,000–150,000 boe/day. Operating cash flow hit N2.46 trillion, pushing the group from a N475 billion net debt position to N532 billion net cash.
However, profit after tax collapsed 82% to N43.30 billion from N245.12 billion. The culprit: a N529.10 billion Renaissance earnout charge (63% of finance costs) and a N721.41 billion tax bill yielding a 94% effective tax rate. Excluding the earnout charge, profit after tax would have been N572.4 billion—a 134% increase. Aradel is now negotiating with the SPDC seller to restructure the arrangement.
The board declared an interim dividend of N7.00 per share (N30.4 billion total). Qualification date is November 27, 2026, with payment on December 7 to shareholders who have completed e-dividend registration.
Unit operating costs fell 28% to $7.9/boe, EBITDA margin improved to 53%, and borrowings dropped 25% to N1.51 trillion. The operational engine is firing—but reported earnings are distorted by acquisition accounting.
With cash generation strong and production growing, but reported profits depressed by non-cash earnout charges, will you value Aradel on operating cash flow and production trajectory or on IFRS earnings that management says don't reflect reality?