”This is The Year We Take Exception…We do the Listing”… - Africa’s premier report on the oil, gas and energy landscape.

”This is The Year We Take  Exception…We do the Listing”…

In the second of a three-part series, GBITE FALADE, Chief Executive Officer of Aradel Holdings, the Nigerian integrated  energy provider, fields a wide range of questions, including, very specifically, the company’s view of listing on a stock exchange, a taboo subject for most Nigerian independents.

Excerots of the conversation, by Akpelu Paul Kelechi

Aradel has had several Annual General Meetings before this year’s…The reports always came. But now, you regularly publish half a year’s report. And you have comprehensive summaries out in the open before the AGM. For investors who are keen and who like to do some analysis and some market intelligence, that’s okay, but Nigerian companies, especially E&P types don’t do that, as a rule….

We don’t want to wait until we become listed before we start disclosure and reporting, which are a fundamental obligation.  We desire to become a company that operates to global standards, not just at the operational level but corporately as well. We actually think that our adherence to such stringent practices only sells the case for us when we become listed.  And it gives the investing public an opportunity to have a clear perspective as to where we are and how we are threading along in our journey.

Aradel has led the Africa Oil+Gas Report’s Talented Tenth Ranking for two consecutive years. Your company is profitable, pays dividends regularly but has promised itself over the last 12 years that it will be listed on the stock exchange. What is holding you back?

Aradel will be listed in 2024. We are already on that journey to becoming a listed company. We already have a programme that we are working with and even the event of our rebranding is part of that effort.  The issue of standardising on the reporting and the disclosures is also part of that effort. So, we are on the home stretch towards becoming a listed company.

Where will Aradel be listed?

We will be listed first on the Nigerian Stock Exchange with the possibility of a second listing subsequently. For now, our efforts are on being listed on the Nigerian Stock Exchange.

Unveiling a new name and logo signals a new beginning for the company with you at the helm. What keeps you up at night when you think of the past 31 years of the company especially how it relates to your responsibilities to steer it into the future?

The company has very faithful shareholders. There are a lot of shareholders that have been shareholders from the very first day that this company started. They are well informed industry people and they’ve remained faithful. They’ve not divested. Now, though practically every one of them in that category are no longer young I think what will be worth their while, for those who are still alive, is to let them see the fulfilment of their dreams. That keeps me awake at night.

Beyond the operational growth, it is about how we unlock values. How do we create the right price determination for shareholders, such that from the dividend that they get as a result of the operational performance and from share price appreciation and capital gain they can truly be happy? That keeps me awake at night.

Our industry is going through some reconfiguration, new players are coming in, old players are enduring. The boldness and the scale of the future that you dream about and how you pursue it will create a clear distinction about your position in the market. So, how “does one sustain the Legacy of leadership in this industry?” How do you play in such a way that in decades to come, you still continue to be a force to be reckoned with in the Industry?

It is not just in terms of scale but also in terms of what else are you pioneering, because pioneering is in the DNA of our company. How are you expanding the frontier of your accomplishments? How are you redefining how this business should work? How are you working to make sure you remain the best performing energy investment? How are you making sure that on multiple indices, you continue to remain right there at the top? It’s not how far we have come over the last 31 years but what we are reinventing to make sure that we continue to stay ahead of the pack. That is what keeps me awake at night.

In the last two years that we have engaged in conversations with you on the promise of Aradel, you have been a little shy of talking about what used to be the company’s pan African ambitions: Its venture in South Sudan; its aspirations in Mozambique.

In the two years leading to 2023, our industry in Nigeria had been comatose and the first instinct is survival. I came in at a time when crude theft was at a record high, when your barrels were not making it to terminals and at that point in time, survival was the natural extent and it became very difficult to then be going conquering across the continent where your house is burning. So, the last two years have been devoted more to arresting the situation and creating some sort of buffer for ourselves within the mad chaos that was going on in our industry and that’s what we have really focused on.  But we have been very active in South Sudan, nonetheless. Our aspiration in going to South Sudan was to replicate our success in Nigeria which is the success in the upstream and we went into a joint venture partnership with NilePet, which is their state-owned national company and our subsidiary is called NileDelta. Our number one aspiration is first and foremost to achieve commercialisation of the significant volume of gas that is being flared.

The second one is also to enter into upstream asset ownership and get some volume. But South Sudan has also had its own fair share of challenges that has then meant that, there is a lot of bureaucracy and things don’t get executed in time at the same pace we have in Nigeria. So, it takes an awful lot of time to sell a case and get the necessary approvals. So, while we are working activity within the structure of the NileDelta JV to achieve these two aspirations, which are still not yet achieved, we have seen progress. What we’ve done is to continue to offer ourselves as the go-to person for oilfield services. Today we are active players in the Electrical Submersible Pumps (ESPs) and the Progressing Cavity Pumps (PCPs), which we offer to help lift the heavy crude that they have and that has been the basis of existence in South Sudan as we speak today, so we’ve got a NIleDelta today that employees over 50 people and as much as 99% of them are South Sudanese that we’ve trained.

We provide PCPs and ESPs to many upstream operators and help them with their with the recovery from their wells, from the heavy oil that they produce whilst working carefully a tripod agenda of gas commercialisation, upstream asset ownership and a potential modular refinery.

We’re not in Mozambique today but we were in Mozambique before. Our board decided for us to scale back from pursuing and progressing the Mozambique opportunity based on some regional factors that we thought was not playing to our strength, but we have since then been actively looking at some other jurisdictions on the African continent. 

In that sense, you are a service provider in some cases?

Yes, we are.

Let’s go back to upstream. You did intimate the public of your plan to acquire an upstream asset but during the unveiling, you kept mute about that asset. Is it time to talk about it?

No, it’s not yet time for the purpose of confidentiality and respect for our counter parties.

So, it hasn’t been signed yet?

I can assure you that in no long a time from now, an announcement will be made and we think it’s only fair that it is made in consultation with the seller.

We’ll be able to speak to the asset itself. We think it’s a very fitting asset that strategically fits into what we currently have and it gives us options to develop that asset along with others that we have in well synergised arrangements that give us a chance to make an economic success out of the development and give us the base for enough scale to justify certain facility investments that make it worth the while. We always want to make sure that we are matching the scale of our surface facilities investment to the reserve potentials we have in order to ensure that it is economically viable.

What kind of volume are you looking at in terms of output?

It’s difficult to put it number to it primarily because there are unexplored prospects within that field. Until we carry out the exploration and appraisal before we are in a better position to say what it is; but we see the opportunity for both oil and gas development. So, it will serve to deepen gas production that is available in the economics both for domestic and otherwise. It will also help in bringing additional barrels of crude and condensates.

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