Aradel Holdings and Seplat Energy delivered exceptional financial performances in the first half of 2026, generating a combined pre-tax profit of N1.54 trillion. However, a staggering N1.13 trillion—representing nearly 73 percent of those earnings—was consumed by income tax expenses, highlighting the enormous tax burden facing Nigeria’s upstream oil producers. While revenues and operating profits surged, the massive tax deductions significantly reduced the earnings ultimately available to shareholders.
Aradel Holdings recorded one of the most striking figures in the industry, reporting a current tax charge of N748.1 billion against a pre-tax profit of N752.7 billion. This means almost every naira earned before tax was initially matched by a tax obligation. Although deferred tax adjustments later reduced the total tax expense reflected in its financial statements, the numbers underscore the impact of the company’s expanded operations following its increased ownership in ND Western Limited and Renaissance Africa Energy Company. The acquisition significantly boosted production and earnings, but it also dramatically expanded Aradel’s tax liabilities.
Seplat Energy experienced a similar trend, with its current tax charge reaching $475.6 million, equivalent to about N654.8 billion, or 82.7 percent of its pre-tax profit. After deferred tax adjustments, the company reported a total tax expense of roughly N564.9 billion. Seplat attributed part of its tax profile to the transition from the older Petroleum Profits Tax regime to the Petroleum Industry Act framework. Although the newer system carries a lower statutory rate for many assets, differences between accounting profits and taxable income, alongside petroleum tax obligations, continued to keep the company’s tax bill exceptionally high.
While Aradel and Seplat struggled with heavy taxation, Oando presented a different financial story. The company reported a profit after tax of N68.56 billion, largely because of a N101.4 billion tax credit arising from the reversal of previously recognised Companies Income Tax provisions. Without this credit, Oando would have remained in a pre-tax loss position due to substantial financing costs, despite improvements in its operational performance. The situation marks the second consecutive year in which tax adjustments have played a decisive role in moving the company from loss to reported profitability.
Despite the tax pressures, investor confidence in Nigeria’s oil sector remains remarkably strong. The NGX Oil and Gas Index has emerged as the Nigerian Exchange’s best-performing sector in 2026, driven primarily by impressive rallies in Aradel and Seplat shares. Investors have responded positively to stronger crude oil prices, rising production, and robust operating performance, even as taxation continues to erode bottom-line earnings. The latest results reveal a growing disconnect between headline profits and shareholder returns, reinforcing the importance of tax policy in shaping the future profitability and valuation of Nigeria’s leading energy companies.
source: nairametrics
