Aradel Holdings Plc’s profit fell 82% in the first nine months of 2026 as a charge linked to its Renaissance acquisition wiped out earnings from record output.
The drop came even though the Nigerian oil and gas producer pumped six times as much as a year earlier, because a N529.1 billion charge tied to its Renaissance acquisition absorbed most of the gains from record output.
Profit after tax fell to N43.3 billion from N245.1 billion, and profit attributable to shareholders dropped 42% to N141.5 billion, the company said in a statement released October 31 on the NGX. Earnings per share fell to N32.57 from N55.90. The board cut the interim dividend to N7.00 a share from N10.00.
The charge relates to an earnout Aradel owes the seller of the Shell Petroleum Development Company of Nigeria (SPDC), which Renaissance Africa Energy bought.
The board said the arrangement “no longer reflects the balanced participation the parties intended”. Aradel and Renaissance’s other shareholders are now in talks with the seller to fix what the company called “the imbalance”.
Operations Boom, Profit Shrinks
Operationally, the period was the strongest in Aradel’s history. It was the first in which ND Western and Renaissance were fully consolidated, after the deal completed on December 31, 2025. Production rose to 144.7 thousand barrels of oil equivalent a day (kboepd), from 24.0 kboepd. That was above the full-year guidance of 110-140 kboepd, which the company raised to 140-150 kboepd.
Revenue rose 633% to N3.95 trillion. EBITDA increased roughly eightfold to N2.10 trillion, a 53% margin. Operating profit rose to N1.56 trillion from N167.5 billion. Realised crude prices averaged $97.5 a barrel, up from $75.6.
The gains disappeared below the operating line. Net finance costs rose to N797.3 billion from N6.0 billion, a figure that includes the earnout charge. Tax expense rose to N721.4 billion, taking the effective tax rate to about 94%, on MoneyCentral calculations.
Without the earnout charge, the rate would have been about 56%.
How the Earnout Works
The seller of SPDC earns a share of net revenues from a defined set of Renaissance’s assets. Aradel books this as contingent consideration and records the charge in finance costs. The liability stood at N1.32 trillion on September 30, down from N1.42 trillion at the end of 2025, after Aradel paid N543.9 billion in cash during the nine months.
The cash cost is large. Earnout payments equalled about 22% of the N2.46 trillion in net cash from operations, and the charge equalled about 13% of revenue, on MoneyCentral calculations. Because the earnout is linked to revenue, it rises when oil prices rise, which limits how much higher crude prices help Aradel.
The company said the charge will keep building at “broadly” the same pace for the rest of 2026.
Aradel Makes a Loss in Third Quarter
For the first half, Aradel had reported profit after tax of N191.04 billion and pretax profit of N752.71 billion, with N153.66 billion attributable to shareholders.
Based on those numbers, Aradel made pretax profit of only about N12.0 billion in the third quarter and a group loss after tax of about N147.7 billion, on MoneyCentral calculations.
Shareholders’ share of that loss was about N12.2 billion. Finance costs for the quarter came to about N515 billion, compared with N326.1 billion for the whole first half.
The company’s statement does not explain why the earnout weighed so much more heavily in the third quarter.
Investors will want an answer on the November 3 conference call.
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