Saudi oilfield services firm, Arabian Drilling Company, said its Q3 2023 revenues jumped by more than 16 per cent to SAR920m, driven by the start-up of three additional offshore rigs on five-year contracts.
The drilling company’s reported revenues of SAR2.5bn year to date (YTD), more than 27 per cent on higher rig activity and higher prices, more specifically in the offshore segment.
Arabian Drilling’s earnings before interest, taxes, depreciation and amortisation (EBITDA) in the three months to September 30 reached SAR392m, with a margin of 42.6 per cent, representing a more than 40 basis points increase quarter-on-quarter (QoQ).
The company’s EBITDA in the first nine months of the year reached SAR1.1bn, rising more than 26 per cent YoY, with profitability of 42.2 per cent, slightly lower than that of the previous year, mainly due to additional employee benefits costs.
Arabian Drilling Q3 2023 net income remained flat QoQ, with the increase in operating profit mostly offset by higher finance costs.
“Previously in Q2 2023, SAR20m of finance costs were capitalised as part of the new offshore rigs capital expenditures (capex) programme,” the drilling firm said in a bourse filing, adding that this capitalisation of finance cost did not reoccur during the period under review due to the rigs start-up.
The Al-Khobar-based firm said operating cash flows in the third quarter plunged by 72 per cent QoQ to SAR98m due to unfavourable changes in working capital, partially offset by mobilisation revenues received about the new offshore rigs.
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 drilling firm 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.
Arabian Drilling reported a fleet utilisation rate of 94 per cent as of September 30 – 47 active rigs out of a total available fleet of 50 units. It added three offshore rigs to the fleet in Q3 2023 and started its five-year contract in July 2023.
“We are also pleased to have delivered all our five offshore rigs on time in accordance with the contract’s ambitious schedule, positioning Arabian Drilling as a reliable partner of choice,” said Ghassan Mirdad, CEO of Arabian Drilling.
“We are now focusing on delivering the new 10-rig unconventional package over the next few quarters. In parallel, we keep looking at the next phase of our growth through opportunities to expand further, both organically and acquisitively.”
The company’s backlog reached an all-time high of SAR12.7bn with an average remaining contract tenure of 2.5 years per rig for the active rigs. The backlog net addition of SAR 5.1bn represents SAR6bn of firm contracts already announced, less than or equal to SAR900m of revenue recognised during Q3 2023.
