Aradel Holdings and Seplat Energy generated a combined pre-tax profit of N1.54 trillion in the first half of 2026. However, about N1.13 trillion, representing 73% of the total, was absorbed by income tax expenses.
The figures underscore the significant tax burden faced by Nigeria’s upstream oil and gas companies, even as they benefited from higher oil prices and stronger earnings during the period.
Aradel Holdings recorded a pre-tax profit of N752.7 billion in the six months ended June 2026. The company reported a current tax charge of N748.1 billion, just N4.6 billion below its pre-tax earnings.
This means Aradel’s current tax charge was equivalent to 99.4% of its profit before tax. However, deferred tax adjustments reduced the total tax expense recognised in its financial statements.
Seplat Energy also recorded a substantial tax obligation. The company posted a pre-tax profit of $574.9 million and a current tax charge of $475.6 million, representing 82.7% of its pre-tax earnings.
Using an exchange rate of N1,377/$, Seplat’s current tax charge translates to approximately N654.8 billion, while its pre-tax profit amounts to about N790.4 billion. After deferred tax adjustments, the company’s total income tax expense stood at approximately N564.9 billion.
Why Aradel’s Tax Bill Increased
Aradel’s sharp increase in tax expense followed the expansion of its business operations at the end of 2025.
On December 31, 2025, the company completed the acquisition of an additional 40% stake in ND Western Limited. The transaction increased its ownership from 41.67% to 81.67%, making ND Western a subsidiary.
The acquisition also raised Aradel’s effective interest in Renaissance Africa Energy Company Limited from 33.3% to 53.3%.
As a result, the first half of 2026 became the company’s first full reporting period reflecting the larger asset base, increased production, higher earnings and the associated tax obligations.
The expansion contributed to Aradel’s current tax charge rising sharply from N39.7 billion in H1 2025 to N748.1 billion in H1 2026.
However, the company’s financial statements do not clearly disclose the tax regimes or petroleum tax rates applicable to its different upstream assets. This makes it difficult to determine how much of the increase resulted from consolidation, stronger taxable earnings or varying petroleum tax rates.
Seplat Explains Petroleum Tax Impact
Unlike Aradel, Seplat provided more details on its tax position.
The company disclosed that its onshore assets, excluding Elcrest, have moved from the former Petroleum Profits Tax regime, which imposed an 85% tax rate, to the Petroleum Industry Act regime with a combined tax rate of 60%.
Despite the lower statutory rate, Seplat’s current tax charge still amounted to 82.7% of pre-tax profit. The company attributed this to the petroleum tax burden as well as differences between accounting profit and taxable profit.
Oando Relies on Tax Credit
Oando reported a different outcome.
The company posted a profit after tax of N68.56 billion, supported by an income tax credit of N101.40 billion.
The tax credit largely resulted from reversing Companies Income Tax provisions previously recognised for the 2023 to 2025 financial years.
Most of the benefit came in the first quarter of 2026, when Oando recognised a tax credit of approximately N114.8 billion. The second quarter recorded a tax expense of about N13.4 billion.
A similar trend occurred in H1 2025, when the company recognised a first-quarter tax credit of N165.6 billion, accounting for most of the N209.05 billion tax credit reported during the half year.
For the second consecutive year, a large first-quarter tax credit enabled Oando to report a profit after tax instead of a net loss.
Although the company’s operating performance improved during the period, heavy financing costs still pushed it into a pre-tax loss before the tax credit was applied.
Investors Continue Buying Aradel, Seplat
Despite the significant tax burden, investors have continued to favour Aradel and Seplat.
The NGX Oil and Gas Index gained 96.32% year-to-date as of July 2026, outperforming the NGX All-Share Index, which rose 57.62%.
The sector also outperformed the NGX Industrial Index, up 85.42%, and the NGX Banking Index, which gained 66.74%.
Much of the rally has been driven by Aradel and Seplat.
Aradel’s share price has risen 127.88% year-to-date, lifting its market capitalisation to approximately N6.63 trillion and adding about N3.72 trillion in market value.
Seplat’s market capitalisation increased 99.45% to about N6.82 trillion, adding approximately N3.40 trillion.
Together, both companies have added nearly N7.12 trillion in market value this year.
Oando has moved in the opposite direction. Its shares are down 8.96% year-to-date and currently trade at about 53% of their 52-week high.
Strong Oil Prices Lift Revenue, But Taxes Reduce Earnings
Higher global oil prices during the first half of 2026 supported stronger revenues and pre-tax earnings for both Aradel and Seplat.
Seplat realised an average oil price of $94.13 per barrel, above the Brent benchmark.
Aradel’s pre-tax profit increased 293.5%, while Seplat recorded a 74.06% rise.
However, heavy tax obligations significantly reduced the earnings ultimately available to shareholders.
Aradel reported basic earnings per share (EPS) of N35.37, despite generating pre-tax earnings equivalent to N173.24 per share.
Similarly, Seplat reported EPS of N365.43, compared with a pre-tax equivalent of N1,280.87 per share.
Oando presented the opposite scenario. Although finance costs resulted in a pre-tax loss, the N101.4 billion tax credit converted that loss into a N68.6 billion profit after tax.
The company also recorded the strongest trailing EPS growth among the three firms at 77.83%, yet its share price has continued to decline.
Overall, the financial results highlight contrasting tax outcomes across Nigeria’s oil and gas sector. While Aradel and Seplat generated substantial profits before tax, nearly three-quarters of those earnings were absorbed by tax expenses. In Oando’s case, tax adjustments transformed a pre-tax loss into a reported profit after tax.
