ADES International Holding PLC (LON:ADES) is a Middle East-focused onshore and offshore drill rig contractor
The company has just completed a US$288mln deal that saw it acquire 31 onshore drilling rigs in Saudi Arabia, Algeria, Kuwait and Iraq from Weatherford International.
Rig utilisation rates in 2018 rose to 85% from 78%.
The order backlog at the end of February totalled US$1.5bn
What it does
ADES Group currently operates a fleet of 13 jack-up offshore drilling rigs, 34 onshore drilling rigs, a jack-up barge, and a mobile offshore production unit (MOPU), which includes a floating storage and offloading unit.
The Weatherford acquisition doubled the operational rig fleet and added 2,300 staff in the Middle East
Some 60% of revenues come from offshore drilling and 40% onshore.
How is it doing
Revenues were 30% higher in 2018 at US$206.5mln as new rigs contributed for the first time and utilisation rates picked up.
Rigs under operation jumped to 28 from 12 in 2017 boosting underlying profits rose by 26% to US$101mln.
Normalised net profit decreased by 10.2% year-on-year to USD 44.6 million in 2018 from USD 49.6 million in 2017 driven by higher net finance cost related to an increase in debt utilisation, as well as higher depreciation and tax expenses.
Material revenue growth forecast in 2019 driven primarily by the full-year impact of the Nabors and Weatherford acquisitions.
Debt to shareholders funds at the year-end was around 103%
ADES has kept within its target of a ratio of order backlog to net debt of at least 2x (times).
What the boss says: Mohamed Farouk, chief executive
“Our focus in 2019 will be on extracting synergies from the acquisitions and the integration of the Weatherford assets, tendering activity and maintaining excellent customer service and asset utilisation, said chief executive,
- Backlog as at end of February 2019 of US$1.5bn, reflecting recently finalised acquisitions, contract renewals and new awards,
- Two new contracts in February 2019 for new-build rigs in Saudi Arabia for a tenure of seven years each
- Renewed six contracts in Saudi in February 2019 for three years each, contributing US$228mln of the additional backlog at signing
- Expanded loan facility with Alinma Bank by US$144mln
- Integration of rigs acquired from Weatherford
- Further improvement in utilisation rates
- Debt reduction
Crude prices continue to support growth in exploration in Middle East region
Stable oil price encourages more drilling and rig rates improve as a result