Arabian Drilling’s Q1 revenue surges by 4% to SAR779m

Saudi oilfield services firm, Arabian Drilling Company, said its Q1 2023 revenues jumped by more than 4 per cent to $208m (SAR779m), driven by the full quarter impact of two recently acquired jackups that started their operations under a three-year contract in the last quarter of 2022.

The drilling company’s earnings before interest, taxes, depreciation and amortisation (EBITDA) in the first three months of the year reached SAR323m, with a margin of 41.5 per cent, representing a 40 basis points increase quarter-on-quarter (QoQ).

Arabian Drilling said operating cash flows in the first quarter reached SAR472m, including the collection of the mobilisation fee for AD110 and AD120. The company said net working capital rose by about 9 per cent in the last 12-month trailing revenue to SAR255m.

“For the rest of 2023, we are focusing on operational excellence while actively participating in key tenders and scouting expansion opportunities. We believe the company is ideally placed to capitalise on some opportunities to grow both our internal Saudi fleet as well as become an important regional player,” said Ghassan Mirdad, CEO of Arabian Drilling.

The company reported capital expenditures of SAR265m, (including SAR18m of capitalised interest), driven mainly by the ongoing shipyard activities and contract readiness of our three contracted jackups AD130, AD140 and AD150.

The Riyadh-listed firm said two of the rigs – AD130 and AD140 u – are currently in Dubai while AD150 is in Singapore and the rigs are expected to commence operations in the third quarter of 2023. Capital expenditure in Q1 2023 was significantly higher as it included the acquisition of the offshore rig AD150.

Arabian Drilling’s cash and short-term investment balance in Q1 2023 stood at around SAR2bn, a more than 8 per cent QoQ increase compared to the last quarter of 2022. The drilling firm plans to use the available cash to finance future growth opportunities.

The company reported a fleet utilisation rate of 94 per cent – 44 active rigs out of a total available fleet of 47 units – in the quarter under review. A land rig (AD63) that was reactivated in Q1 2023 started its new three-year contract with Baker Hughes.

Arabian Drilling FY23 guidance

Meanwhile, Arabian Drilling’s revenue guidance remains unchanged in 2023 and the company expects it to be in the range of SAR3.3bn to SAR3.5bn.

The company is targeting a capital expenditure of SAR1.2bn to SAR1.4bn for 2023, reflecting the ongoing shipyard activities for the three newly acquired jackups as well as discretionary refurbishment and upgrade projects.

Shares in Arabian Drilling soared 18 per cent above the company’s listing price in its market debut Saudi Exchange after it had raised SAR2.67bn. The drilling firm’s initial public offering last November drew $43bn in orders.

Established in 1964, Arabian Drilling is majority-owned by Saudi Arabia’s Industrialisation & Energy Services Company, known as TAQA, which is backed by the Public Investment Fund. TAQA owns 51 per cent and Schlumberger the rest.

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