ADES reports strong 2019 start, in line with expectations

LONDON and DUBAI -- ADES International Holding PLC., an oil & gas drilling and production services provider in the Middle East and North Africa (MENA), updates the market on its operational performance over first-quarter 2019 and on recent positive developments. The financial information included below is unaudited.
 
Operations

During first-quarter 2019, ADES completed the Weatherford transaction. Click here for more details regarding this transaction. In addition, the services company secured its first deepwater drilling services contract in the Egyptian Mediterranean Basin using the group’s asset light model. Also, the company renewed six contracts in KSA for the recently acquired rigs from Weatherford. These contracts will last three years. Finally, two new contracts were secured for new-build rigs in KSA for a tenure of seven years each. 
 
Financial

ADES's revenue increased to $ 108.7 million. This is up by 2.6 times compared to first-quarter 2018 ($41.2 million) and 1.4 times versus first-half 2018 ($79.7 million).
 
Recent news

• Secured additional KSA facility in May 2019. ADES secured an additional $144 million (SAR 540 million) top-up to the $144 million (SAR 525 million) credit facility from Alinma Bank, one of the leading Saudi Arabia based financial institutions.
• Closed USD denominated bond offering in April 2019. ADES closed its offering of $325 million in aggregate principal amount of 8.625% senior secured notes due in 2024.
  • Secured a B+ credit rating from S&P and Fitch.
  • Bond proceeds were used for debt refinancing.
• Contracts in Algeria closed in April 2019. ADES secured two new contracts for its onshore rigs ADES 2 and ADES 3. The ADES 2 contract comprises one firm well and four optional wells and adds an estimated backlog of $8 million. The ADES 3 contract was signed for two years firm and one year optional and will add an estimated backlog of $19 million.                                                     

Trading
 
Trading in first-quarter 2019 has been positive, and with the addition of incremental revenues from the now completed Weatherford acquisition and new Algerian contracts, this will drive sequential progress during second-quarter 2019.  
 
Dr. Mohamed Farouk, CEO of ADES International said:  
 
“We delivered a strong operational performance in the first quarter of the year, significantly accelerating revenue growth which increased by almost threefold compared to first-quarter 2018. Our results were supported by the steady ramp up of utilization rates and the increasing contribution from the 2018 acquisitions.
 
In line with our goal to optimize the group’s capital structure and cost of funding, we have successfully completed a $325 million bond offering and extended our KSA facility with a $144 million top-up. Together, these facilities have strengthened our balance sheet and provide ample liquidity for our capital expenditure requirements.
 
Our focus remains on extracting synergies and properly integrating the recently acquired rigs, tendering activity and maintaining excellent customer service and asset utilisation. ADES’ growing order backlog combined with improving end markets and higher utilisation rates provide significant growth potential and visibility, underpinning our confidence for 2019 and beyond.”