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ADES International going private after weathering Covid-19 and oil price storms

Published: 09:46 12 Apr 2021 BST

Snapshot

  • Middle East onshore and offshore drill rig contractor

  • Traditional skillset onshore and shallow water operations 

  • Deepwater partnership with Vantage

Jack up rig

Our focus remains on extracting synergies and properly integrating the recently acquired rigs, tendering activity and maintaining excellent customer service and asset utilization

Mohamed Farouk, chief executive

 

What it does

ADES International Holdings PLC (LON:ADES) currently operates a fleet of jack-up offshore drilling rigs, onshore drilling rigs, jack-up barges, and a mobile offshore production unit (MOPU), which includes a floating storage and offloading unit.

Some 60% of revenues come from offshore drilling and 40% onshore.

ADES also has a joint venture with deepwater specialist Vantage in the Med.

How it's doing

In March, the Middle East drilling group announced it had agreed to be taken private by a consortium including Saudi Arabia’s sovereign wealth fund in a deal worth US$516mln.

The recommended US$12.50 a share offer represents a 40% premium to the previous night's closing price and was worth 36% more than the volume-weighted average price over the last 30 days.

The bid has been tabled by newly formed Innovative Energy, which is jointly owned by 64% shareholder ADES Investments, Saudi’s Public Investment Fund and Zamil Group.

Later in the month, ADES said it was cautiously optimistic on its prospects for the rest of 2021, as it sees early-stage signs of a recovery as oil prices steadily improve.

The company, in its results statement Tuesday, said it is positioned for recovery from the lows experienced during the third and fourth quarters of the year.

Revenue for 2020 amounted to US$452.1mln compared to US$477.8mln in the prior year meanwhile earnings (adjusted EBITDA) reduced by 3% to US$185.1mln from US$190.6mln in 2019. 

Net profit was reported at US$22mln, and the company said that ‘normalised’ net profit would total US$40mln. Operating cashflow was marked at US$181mln for the year, up from US$178mln in 2019, amidst lower capex and acquisition spend.

The company ended the financial year with US$62.5mln of cash on hand and had undrawn bank facilities amounting to US$92mln.

“Our focus for the coming year remains on actively growing our backlog by pursuing contract renewals and tendering activity while driving further efficiency enhancements through a continued focus on operational efficiency, synergy extraction and digitalisation," said chief executive Dr Mohamed Farouk.

Reviewing last year, it added: “We emerged from 2020 with our top-line largely intact, our EBITDA margin slightly improved due to our successful cost efficiencies and integration efforts, and we maintained a strong financial position with an optimised capital structure.

 

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on 8/3/21