Overview - ADES Group

Drilling for Value

A leading global drilling operator and Saudi Arabia’s national leader in offshore drilling

ADES Holding Company, headquartered in Al Khobar in the Kingdom of Saudi Arabia, is a leading oil and gas drilling and production services provider in the MENA region.

The Company has over 7,500 employees and a fleet of 87 rigs across seven countries in the MENA region and India, including 38 onshore drilling rigs, 46 jack-up offshore drilling rigs, two jack-up barges, and one mobile offshore production unit (“MOPU”).

87

Rigs

In 7 countries

SAR 27.6 billion

Total backlog

As of 30 June 2023G

98%

Effective utilization

Rate for the year ended 31 December 2022G

SAR 1.98 billion

Total revenue from contracts with customers

In H1 2023G (83.3% increase on H1 2022G)

47.0%

EBITDA margin

In H1 2023G (42.5% in 2022G)

7,500+

People

In highly skilled teams

Investment Highlights

Leading global drilling operator focused on the most attractive and resilient drilling markets with a growing global footprint

ADES has built an extensive track record of operational excellence, formed longstanding relationships with well-regarded clients and developed a deep understanding of market volatility.
The Group grew from a local driller operating predominantly in North Africa to one of the largest drilling operators in the MENA region with a fleet of 85 rigs and operations spanning seven countries, including India where three rigs will be operating in 2023.
Over the past decade, the Group expanded its footprint across key geographies, leveraging its ability to identify underserved, niche profitable markets and acquiring value-accretive, distressed assets and companies.
The Group is the largest shallow water driller in the market, in which it operates 46 jackup rigs, including 31 premium jackup rigs, in additional to one mobile offshore production unit and two barges, and has become the partner of choice for key energy suppliers in its markets.
The Group is present in the most attractive drilling markets globally. The Middle East is characterised by low extraction costs, non-harsh environments, and a predominance of drilling intensive legacy fields, making the region less affected by short-term oil price volatility.
The Group is the national leader in offshore drilling in the Kingdom of Saudi Arabia and is the largest jack-up rig operator for Saudi Aramco. It has 33 jack-up rigs contracted in the Kingdom of Saudi Arabia, all of which have been added since 2016G, translating to an approximately 36% market share as at 31 December 2022G.

Operating in markets with high barriers to entry

The Group benefits from high barriers to entry in markets in which it operates, such as significant capital requirements to acquire new assets, a stringent pre-qualification process, local content requirements, rig supply chain constraints, long lead time to build new rigs, and stringent technical specifications for rigs.
With its existing large fleet of 46 jack-up rigs, the Group is the largest offshore jackup rig operator in its markets and is well-positioned to benefit from the increased demand for and scarcity of jack-up rigs in the future.
The Group is one of the leading drillers in terms of local content due to its ability to provide a substantial portion of services utilizing local workforce in each individual market.

Business model resilient by design and well-equipped to withstand market cycles and deliver sustainable performance

The Group’s business model is primarily focused on resilient sub-segments of the drilling industry and is founded on a lean cost structure, which has allowed it to achieve a track record of profitable growth throughout cyclical market conditions in the oil and gas industry.
The Group operates primarily in regions with low costs of production that are dominated by NOCs and is focused on the largest and most resilient drilling markets across the MENA region, namely the Kingdom of Saudi Arabia, Kuwait and Qatar, which are key for the global security of energy supply.
The Group’s lean cost structure is characterised by a high-skill, low-cost, local workforce, an in-house maintenance and technical team, and lean organisational structure, enabling the Group to save on operating costs by maximising the utilisation and efficiencies of acquired rigs.
Supported by a solid backlog, the Group has a proven ability to perform through cycles and maintained an 98% effective utilization rate for the year ended 31 December 2022G. The Group’s revenue from contracts with customers has increased from SAR 1.695 billion (USD 452 million) in 2020G and SAR 1.514 billion (USD 404 million) in 2021G to SAR 2.467 billion (USD 658 million) in 2022G.
The Group maintained a steady EBITDA margin since 2014G, despite significant volatility in the price of oil and gas, with an average of 42.3% between 2020G and 2022G.

High quality client relationships and the partner of choice for the largest and most reliable energy suppliers globally

The Group put in place a project management framework structured around four key pillars, program management, shipyards, staffing, and procurement and logistics, to ensure seamless and efficient delivery of future deployments of rigs to its clients.
The Group has cultivated a client base dominated by the largest global NOCs, who are focused on delivering on long-term strategies and are less susceptible to short-term energy price cycles.
In line with its targeted expansion preliminary in the GCC countries, the Group’s backlog increased from SAR 3.5 billion (USD 0.9 billion in 2020G to SAR 27.4 billion (USD 7.3 billion) in 2022G with 97% coming from GCC.
The Group is well-positioned to benefit from Saudi Aramco’s growth plans because it has aligned its capabilities and asset base to Saudi Aramco’s needs and requirements.
The Group is currently delivering one of the largest rig deployment programs ever awarded to a driller by Saudi Aramco after winning two large tenders in 2022G consisting of a total of 16 rigs, in addition to three contracted rigs that were transferred to the Group after it acquired Seadrill rigs.

Robust contracts and predictable cash flows underpinned by solid backing

The Group’s operational excellence and strong health and safety records underpin its strong client relationships and long-standing contracts, enabling it to generate predictable cash flows and a substantial backlog.
In line with its targeted expansion preliminary in the GCC countries, the Group’s backlog increased from SAR 3.5 billion (USD 0.9 billion in 2020G to SAR 27.4 billion (USD 7.3 billion) in 2022G with 97% coming from GCC.
The Group’s client contracts have a weighted average residual contract term of 5.8 years as of 31 December 2022G.

Track record of disciplined value-enhancing acquisitions focused on delivering value-accretive growth

The Group takes a disciplined and non-speculative approach to acquiring assets and makes acquisitions primarily using:
- a “buy to contract” method, in which it secures a contract before finalising the acquisition, or;
- a “contract acquisition” method, in which it acquires an asset with an ongoing contract that can be novated to the Group.
The Group has a strong track record of procuring, commissioning and successfully integrating the rigs it acquires in a short period.
The Group has proven to be extremely nimble in capturing market opportunities and pivoted quickly from acquiring legacy assets to acquiring premium assets since 2021G, when the prices of premium assets dropped and returns on these investments met the Group’s relevant investment thresholds.
In 2022G, the Group completed the acquisition of 24 rigs and entered into a final agreement to acquire a further two rigs.
The Group targets payback up to five to seven years, depending on the asset, contract framework and country of investment.
In addition to the acquisitive growth, the Group has also grown organically due to its lean cost structure and strong client relationships.

Robust Health, Safety, and Environment (HSE) policies and our exemplary safety record are our license to operate

The Group, through its subsidiaries, is an active member of industry organisations such as International Marine Contractors Association (“IMCA”) and the International Association of Drilling Contractors (“IADC”), and all the operational offshore rigs in its fleet are either IACS-certified or pending recertification.
The Group has consistently maintained a strong position within Saudi Aramco’s Rigs Efficiency Index (“REI”), a key performance indicator considered by Saudi Aramco when awarding long-term contracts, with an average REI score of 90 for the three years ended 31 March 2023, as well as a “high performance” or above rating for 20 out of a total of 25 rigs contracted and operational with Saudi Aramco.
The Group’s longstanding commitment to HSE has enabled it to maintain a strong safety track record, with zero employee fatalities and a total recordable injury rate of 0.1 per 200,000 working hours, which is lower than the IADC worldwide standard rate of 0.67 as at 31 December 2022G.
The Group is developing new tools to improve safety records, such as the “Rig Eye”, an on-site camera-based artificial intelligence system to increase operational efficiency and prevent rig accidents.
ADES is considered to be among the first drillers to launch a project with the aim to reduce emissions from engines by 6% by 2030G and is currently testing new ways to reduce emissions to meet clients’ targets.

Highly capable management team supported by strategic stakeholders

The management team comprises diverse, high-calibre professionals with a deep understanding of the industry’s dynamics and inefficiencies and significant industry experience gained from global and local corporations.
The management’s diverse professional backgrounds are a key strength as they facilitate the Group’s ability to transfer best practices from different industries and introduce innovative solutions to address complex client needs.
The Group also has backing from long-term shareholders who provide unique market access and strategic know-how. ADES Investments Holding Limited, the PIF and Zamil Investment Limited own significant stakes in the Company, thereby being key strategic supporters of the Group’s growth.

Investor Relations