ADES International, the Middle East oil and gas drilling and production company more than doubled its first-half revenues as it added rigs and increased margins.
ADES said its revenue jumped to US$219.9 million from $79.7 million in earlier-year period, while second-quarter revenue increased to $111.3 million from $108.7 million in Q2 2018. The rise was supported by the completion of acquisitions – the company bought rigs from Weatherford that went through a restructuring.
Dr. Mohamed Farouk, chief executive officer of ADES International said: “ADES delivered a strong operational performance in the first half of the year. Our results were driven by the increasing contributions from the newly acquired rigs and were further supported by the steady ramp up of utilisation rates.”
Farouk said he expects the trend to continue into H2 2019 and as a consequence, trading performance is anticipated to be in line with the board’s expectations for the full year, although the higher finance charges will have a modest impact on the overall outturn for the financial year.
In the first-half of 2019, the group secured new banking facilities and undertook a successful maiden 5-year bond issue which provided additional liquidity, headroom and financial flexibility. Additionally, to support business growth post acquisition, ADES replaced the Letters of Guarantee associated with the Weatherford rigs. “Due to these factors, finance charges (on a recurring basis) will be higher on a full year basis than expected. H1 2019 recurring finance charges for the Group are approximately $26.5 million,” ADES said.
ADES said its cash and cash equivalents stood at $40.3 million as of 30 June 2019 compared to $23.6 million in Q1 2019 (31 December 2018: $130 million). Its net debt of $614.0 million, as of 30 June 2019, reflects a period of significant investment to upgrade existing assets, purchase new build rigs and completing the Weatherford acquisition. It expects second-half of 2019 free cash flow generation to improve.
The company has undertaken synergies from the acquisitions to help maximise value, strengthened its balance sheet for future growth liquidity. “The group’s optimised capital structure is now securely in place which is sufficient to support further growth requirements. As a result, we do not expect any further borrowings,” Farouk said.