ADES International eyes Saudi expansion with SAR 750 mln funding: CEO

ADES International Holding, a Dubai-based oil and gas drilling and production services provider, has secured funding worth $200 million (SAR 750 million) to drive its growth strategy in Saudi Arabia, CEO Mohamed Farouk told Argaam in an exclusive interview.

In the first half of 2019, the company partially refinanced its $450 million syndication secured in 2018 through a $325 million five-year senior secured bond due 2024. 

“This allowed us to restructure our commitments and secure a $144 million top-up for our Saudi facility to fund operational growth, as well as a $50 million revolving credit facility,” Farouk said.

The company expects leverage ratios to steadily improve following amortization of interest-bearing loans and annualized returns from newly acquired assets, he added.

Earlier this year, the London Stock Exchange-listed company acquired four rigs in Algeria from US-based Weatherford International, as part of a $287.5 million agreement to buy 31 onshore drilling rigs across Kuwait, Saudi Arabia, Algeria, and Southern Iraq. In June 2018, the firm purchased three offshore jack-up rigs from Texas-based Nabors Industries.

“Through these transactions, we significantly expanded our business and asset base. We now have access to the onshore gas drilling market in Saudi Arabia, which is another exciting area for growth,” he said.

At present, ADES owns 21 rigs in Saudi Arabia, 15 of which are onshore rigs and 6 are jack-up rigs. As of June 2019, the Kingdom represented 46% of its total backlog.

The company’s revenue surged 176% to $219.9 million in the first half of 2019, with operations in the Kingdom contributing 55% to its revenues versus 37% in the same period last year.  

Overall, the asset base comprises over 50 rigs, with long-dated backlog standing at $1.5 billion with an average maturity of 4.2 years. 

“The low-risk approach to acquisitions coupled with our lean cost structure provides a solid platform for organic growth and positions us as a regional champion,” Farouk concluded.

Write to Parag Deulgaonkar at parag.d@argaamplus.com