ADES suspends 5 offshore rigs in KSA; no change in 2024 financial outlook

ADES Holding Co. mutually agreed with its client in Saudi Arabia to suspend the operations at five of its 33 offshore jack-up rigs in the Kingdom, for a period that may extend up to 12 months.

One of the suspended rigs will be deployed as part of the contract ADES recently secured in Thailand. The operations are slated to commence in the second half of 2024. Preparations are underway for another rig to partake in an upcoming project within the region, according to a statement to Tadawul.

The suspension will come into effect seven days after signing the agreed notification, or upon the completion of their current tasks, whichever is later.

ADES highlighted that this suspension mechanism grants sufficient flexibility, enabling the suspended rigs to fulfill mandatory and optional extension periods for new contracts before resuming operations in Saudi Arabia after the suspension period ends.

The company emphasized that the original duration of suspended contracts will automatically extend for a period equivalent to the suspension duration for each rig, ensuring the preservation of remaining work for relevant contracts.

Recent contracts secured in Thailand and anticipated projects in the region offer higher daily rental rates compared to the current average, promising a positive impact on overall profitability.

ADES affirmed that its financial estimates for 2024 remain unchanged, as announced in the business results report for 2023, with projected earnings before interest, taxes, depreciation, and amortization (EBITDA) ranging between SAR 2.89 billion and SAR 3.04 billion, up approximately 35% to 42% annually.

Efforts to market the remaining rigs globally align with ADES's strategy to expand its geographic presence, capitalizing on high demand and promising opportunities within and beyond the MENA region, the statement added.

Given the global demand for offshore jack-up rigs and the rising utilization and rental rates, ADES is well-positioned to capitalize on lucrative opportunities, leveraging its fleet of high-quality rigs, robust global presence, and market presence across nine different regions.