ARADEL HOLDINGS PLC Q3 Result  – Record Profit Surge Driven by Strong Upstream and Refining Output Despite Cost Pressures

Executive Summary

Aradel Holdings Plc delivered a landmark performance for the nine months ended September 30, 2025, posting exceptional earnings growth underpinned by significant expansion in crude oil, natural gas, and refined products output. Despite a challenging oil price environment and elevated cost pressures, the Group demonstrated operational resilience and disciplined execution across its fully integrated energy value chain. Profit Before Tax rose sharply by 57% YoY to ₦300.7 billion, while Profit After Tax surged 122% YoY to ₦245.1 billion, reflecting both increased operating scale and strong contribution from associate operations. Earnings Per Share (EPS) more than doubled to ₦55.90, underscoring robust shareholder value creation. Revenue climbed 43% YoY to ₦538.8 billion, driven by higher volumes across key product categories, notably crude oil, gas, and refined petroleum products. The Group declared an interim dividend of ₦10.00 per share, representing a 25% YoY increase. Operational milestones included a 25% YoY rise in crude oil output, 41% growth in gas production, and 40% growth in refined product volumes, reflecting ongoing capacity optimization and reliability improvements across the asset base.

Financial Highlights – Statement of Profit or Loss

₦’000 Q3 2025 Q3 2024 9M 2025 9M 2024

Revenue 170,732,893 109,266,121 538,809,827 377,580,576

Cost of Sales (99,166,148) (59,941,646) (304,084,899) (166,802,254)

Gross Profit 71,566,745 49,324,475 234,724,928 210,778,322

Other Income/(Loss) 5,418,272 (24,087,941) 14,026,397 (16,562,296)

G&A Expenses (28,070,448) (6,424,416) (81,220,997) (25,134,624)

Operating Profit 48,914,569 18,812,118 167,530,328 169,081,402

Finance Income 2,861,081 4,336,419 15,360,274 10,317,533

Finance Costs (10,309,001) (4,111,256) (21,391,449) (11,537,805)

Net Finance Cost (7,447,920) 225,163 (6,031,175) (1,220,272)

Share of Profit – Associate 67,905,484 10,141,269 139,185,265 23,596,359

Profit Before Tax 109,372,133 29,178,550 300,684,418 191,457,489

Tax Expense (10,641,040) (23,025,387) (55,559,487) (80,878,032)

Profit After Tax 98,731,093 6,153,163 245,124,931 110,579,457

EPS (₦) ₦22.63 ₦1.44 ₦55.90 ₦25.40

Revenue Performance

• 43% YoY revenue growth to ₦538.8 billion, supported by rising production volumes across oil, gas, and refined products.
• Crude oil output averaged 15.3kbbls/day (+25% YoY).
• Gas production surged 41% YoY to 50.6mmscf/day, reflecting increased midstream capacity utilization.
• Refined product output grew 40% YoY to 235.7 million litres, demonstrating refinery reliability and market penetration.

Aradel’s integrated supply chain model enabled effective capture of value across its upstream and downstream operations, mitigating the impact of crude price fluctuations.

Profitability and Margins

• Gross profit rose 11% YoY to ₦234.7 billion, although gross margin fell to 44% (9M 2024: 56%) driven by:
  • Higher production-linked operating costs
  • Lower realized crude oil prices
  • Increased depreciation tied to asset expansion
• Operating Profit was ₦167.5 billion, slightly below FY24 (-1% YoY) due to higher administrative expenses tied to scale growth.
• Associate contribution surged to ₦139.2 billion (+490% YoY), highlighting strong performance from joint ventures.
• Net Finance cost of ₦6.0 billion (vs net income of ₦1.2 billion prior year), reflecting increased borrowings to fund capital expansion.

Overall, after adjusting for non-cash associate contributions, core operating performance remained strong, supported by volume growth and capital productivity.

Balance Sheet Overview

₦’000 Sept 2025 Dec 2024 % Δ

Total Assets 1,958,031,167 1,749,835,623 +12%

Total Equity 1,498,474,952 1,404,109,963 +7%

Total Borrowings 206,505,183 96,399,270 +114%

Cash & Bank 411,832,899 422,206,116 -2.5%

Retained Earnings 542,487,149 395,210,352 +37%

Interpretation

• Asset growth driven by increased investment in associates and upstream/midstream capacity enhancement.
• Borrowings rose significantly as the Group continues to fund strategic expansion and infrastructure projects.
• Strong retained earnings reflect healthy profitability and capital discipline.
• Cash position remains strong despite higher deployment into productive assets.

Key Ratios & Indicators

Metric 9M 2025

Revenue Growth +43%

Gross Margin 44%

PBT Growth +57%

PAT Growth +122%

EPS Growth +120%

Asset Growth +12%

Borrowings +114%

Operational efficiencies remain robust; however cost inflation and borrowing expansion signal a more leveraged growth phase.

Strategic Insights

• Fully integrated energy strategy delivering scale benefits across extraction, processing, and refined product distribution.
• 20 years of uninterrupted production reinforces operational excellence and asset reliability.
• Associate performance a material contributor to earnings quality and diversification.
• Capex-led expansion in midstream & refining to sustain higher throughput and revenue durability.

Strengths

• Proven integrated operations and strong production growth
• Exceptional earnings momentum and dividend consistency
• Strong associate income contributions
• Growing asset base aligned with long-term energy corridor strategy

Weaknesses

• Margin compression from higher operating costs and input-linked expenses
• Rising debt burden and associated finance costs
• Sensitivity to global crude market pricing dynamics

Outlook

Aradel is well positioned for continued growth as production optimization, refinery throughput expansion, and gas monetization initiatives accelerate into FY2026. The Group’s strategic capital deployment and operational efficiency programs will support sustained revenue and earnings uptrend, albeit with careful balance sheet management to mitigate finance cost escalation. Market volatility in global crude prices and inflation-driven cost pressures remain key risks; however, Aradel’s integrated model and rising gas share provide a natural hedge. Aradel’s strong 9M results position the company for a standout full-year performance. Key forward-looking drivers include:

• Continued oil and gas volume ramp-up
• Strengthening domestic gas demand supporting midstream returns
• Efficiency gains from refinery upgrades and enhanced reliability
• Ongoing diversification into energy infrastructure and associated gas developments

With clear visibility into earnings sustainability, progressive dividend policy, and strategic reinvestment capacity, Aradel remains well-placed to maintain its growth trajectory and shareholder value delivery.

Analyst View

“Aradel has delivered industry-leading profit growth, powered by higher output volumes and strong associate contributions. While cost inflation and rising finance expenses moderated margin expansion, the business continues to scale successfully. Continued investment in refining and gas expansion positions the company for sustained long-term earnings and value creation.”

 Conclusion

Aradel Holdings Plc delivered a stellar 9M 2025 performance characterized by record revenue, profit, and EPS growth. Operational strength across its integrated value chain more than offset cost-side headwinds, while strategic investments continue to enhance production and scale efficiencies. With a strong balance sheet, rising retained earnings, and a progressive dividend policy, Aradel remains one of Nigeria’s foremost energy value creation platforms with a compelling growth trajectory.