Buy-outs lead to rise in Ades International's first-half revenue

Oil and gas drilling firm's purchase of assets from Weatherford has seen sales increase by 176 per cent

Ades International Holding, an oil and gas drilling and production services provider reported a 176 per cent rise in the first half revenue. Reuters

Ades International Holding, a Dubai-based oil and gas drilling and production services provider, reported a 176 per cent rise in first-half revenue, driven by contributions from rigs acquired across the Mena region and a steady ramp-up of utilisation rates.

Revenue in the six months to June 30 increased to $219.9 million (Dh807.6m), the company said in a statement to the London Stock Exchange, where its shares trade.

"Ades delivered a strong operational performance in the first half of the year. Our results were driven by the increasing contributions from the newly acquired rigs and were further supported by the steady ramp up of utilisation rates,” said Dr Mohamed Farouk, chief executive of Ades International in a statement.

“We will provide further detail alongside our interim results in September. We expect the trend to continue into H2 (second half) 2019 and as a consequence we expect our trading performance to be in line with the board's expectations for the full year, although the higher finance charges will have a modest impact on the overall outturn for the financial year.”

The company, which serves major national oil companies including Saudi Aramco and Kuwait Oil Company, offering onshore and offshore contract drilling and other services, also said its second quarter revenue in 2019 increased to $111.3m, compared to $108.7 m in the first quarter of 2019.

Cash and cash equivalents stood at $40.3 m as of June 30, 2019 compared to $23.6 m in the first quarter of the year, according to the company. It has net debt of $614m as of June 30, which “reflects a period of significant investment to upgrade existing assets, purchase new build rigs and complete the Weatherford acquisition.”

Last year, Ades International announced the acquisition of 31 onshore drilling rigs in Saudi Arabia, Algeria, Kuwait and Southern Iraq from Weatherford International for a total value of $287.5m.

In the first half of 2019, the company secured new banking facilities and undertook a successful maiden five-year bond issue, raising $325m in April. The company said the issue provided additional liquidity, headroom and financial flexibility.

“We have also strengthened our balance sheet in the last six months with ample liquidity for our future growth requirements,” Mr Farouk added.

“The group's optimised capital structure is now securely in place, which is sufficient to support further growth requirements. As a result, we do not expect any further borrowings.”