Aradel Earmarks $20m For Chappal Energies Acquisition

Aradel Holdings Plc, an indigenous integrated energy company, has earmarked $20 million in restricted cash toward the acquisition of Chappal Energies, reinforcing its strategic ambitions in the domestic energy sector.

This announcement accompanies the release of the company’s unaudited Q1 2025 results, which revealed a 97.6 per cent surge in revenue to N199.9 billion and a 55.3 percent growth in profit after tax to N34.2 billion, compared to Q1 2024.

The $20 million allocation was confirmed in Aradel’s cash flow report, where it noted a significant increase in restricted cash as part of preparations for the Chappal Energies acquisition, a transaction aimed at deepening its asset base and production capacity in Nigeria’s energy market.

The Group’s operating profit soared to N63.6 billion, a 79.1 per cent increase from the prior year, driven by higher crude oil production volumes, improved throughput via the Trans Niger Pipeline (TNP), and efficient utilization of the Alternative Crude Evacuation (ACE) system. Crude oil sales hit 1.2 million barrels in Q1 2025, almost tripling from 0.39 million barrels in Q1 2024, and accounted for 71.1 percent of total revenue.

Speaking on the company’s results, Aradel CEO, Adegbite Falade, said, “Our Q1 performance reflects the momentum we built in 2024. We benefited from new well completions and the extended well test at Omerelu, while our gas output was temporarily challenged by pipeline issues, which we have since addressed. Looking ahead, we are well-positioned for stronger results in Q2.”

However, gas revenue fell by 35.5 per cent to N4.4 billion, due to a 48.7 per cent drop in production stemming from the aforementioned pipeline disruptions. On the refining side, the company sold 75.5 million litres of petroleum products, a 26 per cent increase year-on-year.

Despite the top-line growth, the cost of sales surged by 214.3 per cent to N121 billion, with royalty payments, crude handling charges, and depreciation expenses accounting for a significant portion of the increase. General and administrative expenses also rose sharply by 149.2 per cent to N15.9 billion, mainly driven by staff cost escalations linked to a new share-based incentive scheme and technology-related subscriptions.

Aradel also recognised a non-cash debt financing of N50.1 billion linked to its associate ND Western’s role in funding the Renaissance consortium’s acquisition of Shell Petroleum Development Company (SPDC), a landmark deal concluded in March 2025. Aradel holds a 33.3 per cent stake in Renaissance Africa Energy Holdings through a direct 12.5 per cent share and an indirect 20.8 percent via ND Western.

Cash flow from operating activities fell 45.1 per cent to N30.6 billion, impacted by delayed receipts of N70.3 billion from crude and gas sales.

The acquisition-related $20 million set aside for Chappal Energies also weighed on available cash. Meanwhile, investment activities saw a 341.5 percent jump in net outflows to N72.5 billion, reflecting higher capital expenditure and increased equity investments.

Despite these pressures, Aradel’s total assets grew by 4.7 per cent to N1.83 trillion, while total equity rose 2.6 per cent to N1.44 trillion, underpinned by retained earnings and positive share of profit from associates.

With the strategic push into acquisitions and steady operational growth, Aradel’s financial performance underscores a broader ambition to solidify its leadership in Nigeria’s evolving energy landscape.

The planned acquisition of Chappal Energies represents a calculated step in expanding its upstream footprint and long-term production capabilities.