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ADES International well positioned going forward with order backlog

Snapshot

  • Middle East onshore and offshore drill rig contractor

  • Traditional skillset onshore and shallow water operations 

  • Two deepwater contracts picked up this year though Vantage JV 

Jack up rig

Quick facts: ADES International Holding PLC

Price: 9.75 USD

LSE:ADES
Market: LSE
Market Cap: $418.76 m
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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 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.

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

 

How it's doing

For the year ended 31 December 2019, the firm reported underlying earnings (EBITDA) of US$193.4mln, up from US$101mln in 2018, while revenues surged 132% to US$477.8mln.

The revenue rise was attributed to increased contributions from the company’s Weatherford and Nabors rigs, as well as organic growth of 10% as a result of better utilisation and two new onshore rigs being deployed in Saudi Arabia.

Looking ahead, ADES said the coronavirus pandemic has “not significantly impacted” its activities to date, and that with the vast majority of its rigs staffed locally, mobility restrictions were not expected to significantly impact its operations.

The company added that it is “well-positioned” despite lower global oil prices due to a long-dated backlog of orders, which it said provided “significant visibility” and supported future cash generation.

ADES is also expecting an improvement in its net debt position due to “resilient earnings and lower capital expenditure”.

 

What the boss says - CEO Mohamed Farouk

“2019 saw the completion of ADES's transformation with a strong financial performance, an integrated and strengthened asset base, a substantial order backlog and a long term and liquid balance sheet”.

“2020 has started as expected and, whilst we are closely monitoring the impact of [coronavirus] and the low oil price environment, our operations to date have not been significantly impacted. We are confident that the group is well positioned to weather these tough end market conditions underpinned by the order book cover, low cost operating model and [Middle East and North Africa] region focus".

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