GCR Affirms Aradel Holdings AA-, A1+ Ratings with Stable Outlook
GCR Ratings, a ratings agency focused on African issuers, has confirmed the national scale long-term and short-term issuer ratings for Aradel Holdings Plc at AA-(NG) and A1+(NG), respectively.
According to the rating note, the African-focused ratings agency also affirmed the national scale long-term issue rating of AA-(NG) accorded to Aradel Holdings Plc’s N10.318 billion Series 1 Senior Unsecured Bonds.
The outlook on the ratings is accorded as stable, while GCR said its ratings affirmation reflects Aradel Holdings Plc’s consistent earnings growth and sound cash generation, which have supported a very conservative debt level amid ongoing business expansion.
It added that nevertheless, the ratings also reflect the group’s modest market position relative to the larger companies within the broader oil and gas sector.
Aradel Holding continues to consolidate its competitive position through production capacity optimisation and strategic acquisitions across its business segments, GCR said.
“In March 2025, the group acquired a 100% equity stake in Shell Petroleum Development Company of Nigeria through the Renaissance Africa Energy Holdings consortium.
“Likewise in 2024 Aradel Holdings fully acquired the Olo and Olo West marginal fields from TotalEnergies EP Nigeria and NNPC Limited, alongside 6.048% equity stake in Chappal Energies Mauritius Limited, who holds a working interest of 53.85% in OML 128.
“As of August 2025, total oil producing wells registered at 15, with crude oil production capacity of 13751 bopd (2024).
“Its automotive gas oil’s refining capacity utilisation has also increased by 21.89% to 32.3 mmscf/d (2024) (2023: 26.5 mmscf/d), and efforts are underway to complete the premium motor spirits refinery.
“We expect the ongoing business expansion plans to boost revenue, strengthening its diversified business operation across the oil and gas value chain, and the overall business profile.
“However, our assessment of the group’s competitive position remains limited by its modest market share, when compared to much larger players with the Nigerian oil and gas sector”, the rating note reads.
GCR highlighted that the group has sustained an upward topline trajectory over the five-year review period to 2024, delivering a compound annual growth rate of 44%.
In the financial year ended 31 December 2024, revenue increased by 14.9% to $393 million from $342 million in 2023, and further by an annualised rate of 20.9% in the six-month ended 30 June 2025, ratings analysts said.
This was driven by higher crude production, sustained gas and refined products volumes, and marked reductions in oil losses through its alternative crude oil evacuation system.
“We expect the solid revenue progression to be maintained over the review period as incremental contributions from the recent acquisitions and ramp-up of expansion project begin to significantly boost revenue.
“While the EBITDA margin enhanced to 65.6% in 2024 (2023: 62.7%) on the back of strong operating and scale efficiencies, it contracted to 45.6% in H1 2025 due to expansion-related costs, which should persist through 2025.
“However, we expect the margin position to rebound to historical level of above 60% by 2026 as projects are completed and much of the costs are being recouped”.
Leverage and capital structure is a key ratings support, according to GCR, underpinned by the group’s conservative debt profile and solid internal cash generation, which have enabled capacity expansion with limited reliance on external financing.
Aradel gross debt declined slightly to $63.3 million in 2024 from $69 million in 2023 following the repayment of maturing obligations but rose to $91.6 million in H1 2025 due to a short-term related party loan secured to finance the group’s acquisition of Shell Petroleum Development Company of Nigeria,
Ratings analysts said nevertheless, the low debt level and substantial cash on hand sustained a net ungeared position. The company’s net interest coverage strengthened to 61.0x in 2024 from 22.5x in 2023 on the back of solid earnings, with net interest income recorded in H1 2025.
Similarly, operating cash flow coverage of debt remained strong at over 200% in 2024 and H1 2025, reflective of the robust cash generation and disciplined working capital oversight.
“While we take cognisance of the ongoing business expansion phase, leverage metrics should remain at strong levels over the outlook period, backed by anticipated earnings growth and prudent debt management”.
Ratings analysts said the uses-versus-sources liquidity assessment remains strong on the back of the historically robust cash generation.
“The company’s liquidity coverage registered at 4.0x over the six-month period to December 2025 and 2.0x over the 18-month period to December 2026, predicated upon anticipated higher operating cash flows and a sizeable cash balance of $230 million as of 30 June 2025.
“We have also incorporated the sizable unutilised committed facilities of $111.0 million, provided by two financiers, into the liquidity assessment”.
GCR ratings analysts said rhese liquidity supports are adequate to cover short-term repayments of $32 million and forecasted capital spending of $85 million.
The N10.32 billion Series 1 Bonds are direct, unconditional, senior, unsubordinated and unsecured obligations of Aradel Holdings (the bond issuer), ranking pari passu with all other senior unsecured creditors of the group.
“We have reviewed the Trustee’s report as of 04 September 2025, regarding the bonds performance and noted that Aradel Holdings has complied with the transaction terms and conditions in respect of the payment obligations on the bonds.
“Being senior unsecured debt, the bonds bear the same probability of default as the issuer and would reflect similar recovery prospects to senior unsecured creditors in the event of a default.
“As such, the long-term rating for the Series 1 Bonds is equalised with Aradel Holdings’ long term senior unsecured corporate rating”, GCR analysts stated.
The stable outlook reflects GCR opinion that Aradel Holdings’ vertically integrated operations and ongoing capital investments will continue to bolster its strong earnings performance and robust cash flows amid the expansionary phase. Fitch Downgrades France to ‘A+’ with Stable Outlook
