ADES retains strong utilization rates of up to 98%; backlog at SAR 741M in Q1 2024: CEO

Mohamed Farouk, CEO of ADES Holding

ADES Holding Co. maintained strong utilization rates of up to 98%, besides managing to win new contracts and enhance the value of its backlog to SAR 741 million during the first quarter of 2024, CEO Mohamed Farouk said.

Commenting on the company’s Q1 2024 financials, the CEO added that this reflected the strong rates of backlog renewal, providing further clarity on the future of cash flows in the long term.

Farouk indicated that the company made significant growth in revenues in Q1 2024, driven by the recent expansions and as the contribution of platforms that ADES had operated was passed on. This was reflected in the company’s financial performance as the end of the first quarter of 2024 approached.

He explained that ADES continued to implement its expansion plans. It won new contracts as part of its previously-announced strategy to deepen its presence in India and Southeast Asia. In addition, the company was recently awarded a new project in the Gulf of Thailand, thus entering its ninth market.

ADES mostly managed to contain the impact of the temporary work suspension of some platforms in Saudi Arabia, after Saudi Aramco announced fixing the maximum production capacity, he noted.

The CEO also pointed out that the total share of suspended platforms from ADES operating offshore drilling fleet in the Kingdom is about 15%. However, this suspension mechanism entails the automatic renewal of the original term of the suspended contracts for a period equal to the suspension period for each platform, hence ensuring optimum backlog for the respective contracts.

This mechanism grants sufficient flexibility, enabling the suspended rigs to fulfill mandatory and optional extension periods for new contracts before resuming operations in Saudi Arabia after the suspension period ends, he continued.

Meanwhile, Farouk pointed to the group’s growth prospects and the presence of ample opportunities in the highly attractive markets of Southeast Asia, in addition to having a large, high-demand fleet of jack-up drilling rigs. These are all factors giving ADES great options and competitiveness that support a multi-year growth cycle in the drilling industry.

Furthermore, he indicated that management maintains its estimates earlier announced in its 2023 financial statement, which suggested earnings before interest, taxes, depreciation and amortization (EBITDA) for 2024 to range between SAR 2.89 billion to SAR 3.04 billion, an increase of 35-42% year-on-year (YoY).

According to data compiled by Argaam, ADES Holding’s profits rose to SAR 197.1 million in Q1 2024, compared to SAR 87.6 million in the prior-year period.