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Aradel Holdings and Seplat Energy generated a combined pre-tax profit of N1.54 trillion in the first half of 2026.

However, N1.13 trillion, or 73%, was absorbed by total income tax expenses.

The current tax figures were even more striking. Aradel Holdings recorded a current tax charge of N748.1 billion, just N4.6 billion below its N752.7 billion pre-tax profit for the six-month period.

In other words, Aradel’s current tax charge was equivalent to 99.4% of the profit it generated before tax. However, deferred tax adjustments reduced the total tax expense ultimately recognised in its income statement.

Seplat Energy was not far behind. Its current tax charge of $475.6 million represented 82.7% of its $574.9 million pre-tax profit.

At an exchange rate of N1,377/$, this translates to a current tax charge of approximately N654.8 billion against N790.4 billion in pre-tax profit. After accounting for deferred tax, Seplat’s total tax expense stood at about N564.9 billion.

Why the current tax charge looks brutal

For Aradel, the sharp increase largely reflects the dramatic expansion of its operating and tax base at the end of 2025. On December 31, 2025, the company completed the acquisition of an additional 40% stake in ND Western Limited, increasing its ownership from 41.67% to 81.67% and making ND Western a subsidiary.

• The transaction also increased Aradel’s effective interest in Renaissance Africa Energy Company Limited from 33.3% to 53.3%.
• H1 2026 was therefore the first full reporting period reflecting Aradel’s expanded exposure to ND Western and Renaissance, along with the additional production, earnings and tax obligations associated with the enlarged business.
• This expanded tax base helps explain why Aradel’s current tax charge jumped from N39.7 billion in H1 2025 to N748.1 billion in H1 2026.

However, Aradel’s filing does not clearly specify the fiscal regimes or tax rates applying to its different upstream assets.

That makes it difficult to separate how much of the increase came from consolidation, higher taxable earnings and the petroleum tax rates applied to individual assets.

Seplat provides more detail. Its onshore assets, excluding Elcrest, have moved from the old Petroleum Profits Tax regime, which imposed a rate of 85%, to the Petroleum Industry Act regime, with a combined tax rate of 60%.

• Seplat’s current tax charge was nevertheless equivalent to 82.7% of its pre-tax profit, reflecting not only the high statutory petroleum tax burden but also differences between accounting profit and taxable profit.

Oando: when tax is the only reason there’s a profit

Oando’s reported profit after tax of N68.56 billion was only possible because of a N101.40 billion income-tax credit, largely arising from the reversal of Companies Income Tax provisions previously recognised for the 2023 to 2025 financial years.

The credit was heavily concentrated in the first quarter. Oando recognised a tax credit of approximately N114.8 billion in Q1 2026, while the second quarter recorded a tax expense of about N13.4 billion.

A similar pattern appeared in H1 2025. The company recognised a tax credit of N165.6 billion in the first quarter, accounting for most of the N209.05 billion credit reported for the half year.

For the second consecutive year, therefore, a large first-quarter tax credit made the difference between Oando reporting a net loss and a profit after tax.

That does not mean the underlying business failed to improve. Oando recorded a significant operating recovery during the period, but its financing costs were still large enough to push the company into a pre-tax loss.

The market has already made its bet

None of this has stopped investors from piling in. The NGX Oil and Gas Index is the best-performing sector index on the Exchange this year, up 96.32% year-to-date as of July 2026, well ahead of the broader NGX All-Share Index’s 57.62%, and ahead of NGX Industrial (85.42%) and NGX Banking (66.74%), the next-best performing sectors.

That rally is not a broad-based oil and gas story; it is being carried almost entirely by two names.

• Aradel’s share price is up 127.88% year-to-date, taking its market capitalisation to about N6.63 trillion and adding about N3.72 trillion in value this year alone. Seplat’s market cap is up 99.45% year-to-date to about N6.82 trillion, adding about N3.40 trillion.

Between the two, that is close to N7.12 trillion in combined market value added in a single year, almost certainly the bulk of the entire sector index move.

Oando, over the same period, is down 8.96% and trading at just 53% of its 52-week high, running in the opposite direction of the sector.

The logic behind the Aradel and Seplat rally is not hard to trace. Elevated global oil prices through H1 2026, against a backdrop of ongoing geopolitical tension, some board room politics and corporate disclosures.

These might have given investors reason to expect higher prices to flow cleanly through to both revenue and profit.

• Seplat itself realised an average of $94.13 per barrel in the period, a premium to Brent. On the topline, that bet has clearly paid off, and pretax profit did rise sharply at both companies 293.5% at Aradel, 74.06% at Seplat.

But the tax mechanics above are exactly why the bottom line has not kept pace with the price action. That gap shows directly what shareholders actually earn per share.

• Aradel’s reported H1 2026 basic EPS was N35.37; its N752.7 billion pretax profit works out to N173.24 per share before tax, meaning tax alone accounts for most of the difference between a stock earning N173 a share and one earning N35.37.
• Seplat’s reported H1 2026 EPS was N365.43, against a pretax-per-share equivalent of N1,280.87.

In both cases, the number that ends up on the income statement, and the one the market is pricing when it bids these shares up, is a fraction of what the underlying business generated before tax

• Oando remains the cautionary case. Its operating performance improved, but heavy finance costs still left it with a pre-tax loss. A N101.4 billion tax credit then converted that loss into a N68.6 billion profit after tax.

Its trailing EPS grew fastest of the three, 77.83%, and yet its stock has fallen and sits at barely half its 52-week high.

Overall, Aradel and Seplat are highly profitable before tax, but about three-quarters of those profits disappear at the tax line. Oando presents the reverse: tax transformed a loss into profit.