Aradel Holdings Plc Reports Revenues of ₦268.3 billion as at H1 2024, up 260.2%

Lagos, Nigeria – 31 July 2024 – Aradel Holdings Plc (“Aradel”, “Aradel Holdings”, “the Company” or “the Group”), Nigeria’s leading integrated indigenous energy Company, announces its unaudited half year results for the period ended 30 June 2024.

The Chief Executive Officer of Aradel Holdings Plc, Mr Adegbite Falade, comments:

“The Company’s performance in the first half of 2024 consolidated on the improved operational and financial performance from 2023. We achieved increased diversification of our revenue streams on significantly improved hydrocarbons production, and material increases in the output from our refinery operations. Wells 14 and 15 have now been drilled – and results have been favourable – concluding our Phase 1, 4-well turnkey drilling campaign. To accommodate the expected incremental volumes, we also expanded the throughput capacity of our Alternative Crude Evacuation (“ACE”) operations. These activities, among others, put us in a position to maintain the output and efficiency levels for the second half of the year.

Omerelu field appraisal was completed, and first oil was achieved via re-entry of well 2ST in May 2024. Extended Well Testing is ongoing, in accordance with regulatory approvals.”

Group Financial Highlights

Operational Highlights

• Production and Refining:
  • Crude oil production of 12,957 bbls/day up 51.7% (H1 2023: 8,544 bbls/day)
  • Gas production of 40.4 MMscfd (7,132 boepd) up by 75.4% (H1 2023: 23.0 MMscfd (4,067 boepd))
  • Refined petroleum products sold 122.2 mmltres up by 114.4% (H1 2023: 57.0 mmltres)
• Average realised oil price per barrel of $87.5 (H1 2023: $74.7)
• Average realised gas price per mscf of $1.5 (H1 2023: $1.8)
• Underlying cash operating cost (boe) of $20 (H1 2023: $20)

Financial Review

Foreign exchange dynamics, from the floating of the naira in 2023, played a major role in the financial performance of the Company. Average exchange rate in H1 2024 was ₦1,345:US$1, and ₦482: US$1 in H1 2023.

Revenue increased by 260.2% to ₦268.3 billion (H1 2023: ₦74.5 billion). This was driven by:

• 332.2% increase in export crude oil revenue (63.8% of total revenue) to ₦171.1 billion (H1 2023 ₦39.6 billion; 53.2% of total), attributed to increased production levels, significant impact of improved utilization of the Trans Niger Pipeline (TNP) on which there has been reduced crude losses, and additional value from the ACE route with resultant higher crude oil lifting of 1.5Mbbls in H1 2024 vs 1.1Mbbls in H1 2023.
• Gas revenue recorded a 321.8% increase to ₦15.5 billion (5.8% of total), due to higher production volumes (H1 2023: ₦3.7 billion; 4.9% of total revenue).
• 161.6% increase in refined products’ revenue (30.4% of total) to ₦81.7 billion (H1 2023: ₦31.2 billion; 41.9% of total revenue) due to increased production and sales volumes of 122.2 mmltres, up by 114.4% (H1 2023: 57.0 mmltres).

Cost of sales (COS)[1] increased by 327.0% to ₦105.5 billion (H1 2023: ₦24.7 billion). This was primarily driven by:

• Crude Handling Charges (34.4% of COS) which increased by 376.9% to ₦36.3 billion (H1 2023: ₦7.6 billion) arising from the higher activity levels across the Trans Niger Pipeline (TNP) and ACE operations.
• Depreciation (36.2% of COS) increased by 278.7% to ₦38.2 billion (H1 2023: ₦10.1 billion) due to higher hydrocarbon production and addition of newly completed well costs.
• Royalties (21.8% of COS) increased by 499.7% to ₦22.9 billion (H1 2023: ₦3.8 billion). This is attributable to higher production levels during the period.

General and Administrative (G&A) expenses increased by 201.0% to ₦20.1 billion (H1 2023: ₦6.7 billion). The major drivers of this growth include:

• Hedging expenses (10.1% of G&A expenses) increased by 139.2% to ₦2.0 billion due to fair value loss on crude oil hedge (H1 2023: ₦0.9 billion).
• Other expenses[2] (7.0% of G&A expenses) increased by 186.6% to ₦1.4 billion (H1 2023: ₦0.5 billion).
• Staff costs (31.7% of G&A expenses) increased by 346.9% to ₦6.3 billion (H1 2023: ₦1.4 billion) mainly due to staff additions, and employee remuneration adjustments.
• Professional Fees (10.0% of G&A expenses) increased to ₦2.0 billion, up 144.5% (H1 2023: ₦0.8 billion) primarily due to Naira devaluation.

Operating profit of ₦150.3 billion (H1 2023: ₦29.8 billion). H1 2024 recorded net other income of ₦7.5 billion relative to a net loss of ₦13.3 billion in H1 2023. This was due to an exchange gain of ₦6.9 billion (H1 2023: exchange loss of ₦13.4 billion) arising from CBN’s floating of the Naira.

Finance cost increased by 35.2% to ₦7.4 billion (H1 2023: ₦5.5 billion) driven primarily by naira devaluation which offset the decrease in the interest expense in US Dollar terms from the ongoing settlement of our loan obligations. Finance Income increased by 242.1% to ₦5.9 billion (H1 2023: ₦1.7 billion) resulting from amounts earned on invested cash and cash equivalents as well as Naira devaluation.

Profit before tax of ₦162.3 billion, up by 482.2% (H1 2023: ₦27.9 billion), with an Income tax expense estimate of ₦57.8 billion (Cash Tax ₦33.2 billion and Deferred tax ₦24.6 billion)

Profit after tax increased by 694.6% to ₦104.4 billion (H1 2023: ₦13.1 billion)

Year-to-date growth in total assets of 72.4% to ₦1.5 trillion (FY 2023: ₦923.4 billion) driven by:

• Increase in Property, plant and equipment by 65.2% to ₦633. billion (FY 2023: ₦383.4 billion). This was impacted mainly by increased capital expenditure and higher FX rates.
• Increase in the value of assets of ND Western, the Company’s associate, to ₦456. billion, up 68.9% year-to-date (FY 2023: ₦270.2 billion) due to share of profit and other comprehensive income for the period.

Total liabilities rose by 76.6% to ₦386.3 billion (FY 2023: ₦218.8 billion). This increase is attributable to higher tax liability estimates for the period and the Naira devaluation which caused a significant increase in translation differences.

Total equity increased by 71.1% to ₦1.2 trillion (FY 2023: ₦704.6 billion) primarily due to the retention of total comprehensive income over the period.

Cash flows from operating activities
The Company generated cash flows from operations of ₦169.5 billion as at H1 2024, an increase of 236.7% (H1 2023: ₦50.3 billion), and net cash flows from operating activities of ₦165.4 billion was up 232.6% (H1 2023: ₦49.7 billion). This growth was buoyed by receipts of US$51 million from December 2023 crude oil sales, as well as steady improvement in crude oil and refinery product sales (and cash receipts).

Cash flows from investing activities
Net cash flows used in investing activities was N45.7 billion, up 209.4% (H1 2023: N14.7 billion). This increase is mainly driven by capital expenditure of ₦49.2 billion year-to-date (H1 2023: ₦14.1 billion) due to the ongoing 4-well drilling campaign, and the attendant foreign exchange effects.

Cash flows from financing activities
Net cash flows used in financing activities was N56.2 billion, up 306.6% (H1 2023: N13.8 billion), due to payment of a final dividend of N170 per share amounting to N36.9 billion for the year ended 31 December 2023 in H1 2024.

Contact Information

Investors and analysts
Adegbola Adesina
Chief Financial Officer
Email: adegbolaadesina@aradel.com
IR@aradel.com

Investor Relations advisers
Værdi Investor Relations
Oluyemisi Lanre-Phillips
Email: TeamAradel@vaerdi.org

Consolidated statement of profit or loss and other comprehensive income for the period ended 30 June 2024

Consolidated statement of financial position as of 30 June 2024

Consolidated statement of cash flows for the period ended 30 June 2024

Consolidated statement of profit or loss and other comprehensive income (US Dollars) for the period ended 30 June 2024

Consolidated statement of financial position as of 30 June 2024 (US Dollars)

Consolidated statement of cash flows for the period ended 30 June 2024 (US Dollars)

Definition of ratios
Operating profit margin is operating profit divided by total revenue.
EBITDA margin corresponds to EBITDA divided by total revenue.
Profit before tax corresponds to EBIT minus net finance (cost)/income and plus share of profit of associates and joint venture using the equity method.
Effective tax is income tax expense dividend by profit before income tax.
Profit before tax margin corresponds to Profit before Tax as a % of Revenue.
Return on equity corresponds to net profit reported to total equity.
Return on assets corresponds to net profit reported to total assets.
Return on ratio the return on total asset ratio indicates how well a company’s investment generate revenue.
Leverage refers to the amount of debt used to finance assets.

Glossary of terms
mmbbls – million barrels of oil
bscf – Billions of standard cubic feet of gas.
boepd – Barrels of Oil Equivalent Per Day
mscf – one thousand standard cubic feet
boe – Barrel of oil equivalent
bbl/d – barrels per day

Notes to editors
Aradel Holdings Plc (“Aradel Holdings” or “the Company”) is Nigeria’s foremost integrated independent energy company, delivering critical energy solutions in a sustainable and responsible way. Aradel Holdings was incorporated on March 25, 1992 (as the Midas Drilling Fund), changed its name to Niger Delta Exploration and Production Plc in November 1996, and assumed its current name in May 2023.

The Company operates through its subsidiaries and an affiliate company:

• Aradel Energy (100%) is a wholly owned subsidiary of Aradel Holdings, as well as the Operator of the Ogbele Joint Venture.
• Aradel Gas Limited (100%), a wholly owned subsidiary established to pursue investment opportunities in the gas sector.
• Aradel Investments Limited (100%), also a wholly owned subsidiary established to pursue NDEP’s property interests.
• Aradel Refineries Ltd (95%)., an independent operating midstream entity, underscoring NDEP’s commitment to attaining Energy Independence in Nigeria.
• ND Western Limited (41.67%) is a consortium of four companies: Niger Delta Petroleum Resources Ltd., Petrolin Group, First Exploration & Petroleum Development Company Ltd., and Waltersmith Petroman Oil Ltd.

For further information please refer to our website, aradel.com/

Forward looking statements
Certain statements in this document may constitute forward-looking information or forward-looking statements under applicable Nigerian Securities laws (collectively “forward-looking statements”). Forward-looking statements are statements that relate to future events, including the Company’s future performance, opportunities, or business prospects. Any statements that express or involve discussions with respect to expectations, forecasts, assumptions, objectives, beliefs, projections, plans, guidance, predictions, future events or performance (often, but not always, identified by words such as “believes”, “seeks”, “anticipates”, “expects”, “continues”, “may”, “projects”, “estimates”, “forecasts”, “pending”, “intends”, “plans”, “could”, “might”, “should”, “will”, “would have” or similar words suggesting future outcomes) are not statements of historical fact and may be forward-looking statements.

By their nature, forward-looking statements involve assumptions, inherent risks and uncertainties, many of which are difficult to predict, and are usually beyond the control of management, that could cause actual results to be materially different from those expressed by these forward-looking statements. Undue reliance should not be placed on these forward-looking statements because the Company cannot assure that the forward-looking statements will prove to be correct. As forward-looking information address future conditions and events, they could involve risks and uncertainties including, but are not limited to, risk with respect to general economic conditions, regulations and taxes, civil unrest, corporate restructuring and related costs, capital and operating expenses, pricing and availability of financing and currency exchange rate fluctuations. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements.