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Ades looks to go from strength to strength after London listing

The Admarine V rig, which was contracted to Belayim Petroleum Co. (Petrobel), a joint venture between ENI IEOC and Egyptian General Petroleum Corporation (EGPC) in July.
The Admarine V rig, which was contracted to Belayim Petroleum Co. (Petrobel), a joint venture between ENI IEOC and Egyptian General Petroleum Corporation (EGPC) in July.

A fledgling oil and gas drilling services firm which listed in London this year plans to continue its strong start to life with exclusive marketing deals with shipyards.

Ades International chief executive Mohamed Farouk said agreements with yards in Asia would give the company access to new build jack-up rigs without breaking the “asset-light”, low cost model.

The agreements allow Ades to say which rig they plan to use when bidding for drilling contracts.

But Ades only charters the rig if it wins the tender. It then shares the proceeds of the contract with the yard.

Mr Farouk said Ades had taken advantage of the current market conditions and that the approach fitted in with the low-risk strategy.

“We don’t buy assets like some of the other companies and just wait to win the tenders,” Mr Farouk said.

“At the moment the market is oversupplied with those assets.

“Shipyards are struggling with a lot of vessels on their balance sheets so we were able to sign deals which give us access to new-build jack-ups which we could put into tenders.

“You are getting state of the art assets with the lowest operating expenditure.”

He was speaking after Ades published its first half results, which showed a 45% increase in revenues to $87.8million.

The company put its performance down to a high rig utilisation rate and the ramp up of operations in Saudi Arabia.

Pre-tax profits came to $16.6million, down from $18.7million in the same period last year.

Mr Farouk said the six months had been a milestones period for Ades as the firm “joined the ranks of internationally recognised” oil service companies listed in London.

Incorporated in 2016 and registered in Dubai, Ades joined the London Stock Exchange in May and raised $170million from the sale of the new shares.

Ades currently has a market capitalisation in excess of £400million, with a share price of around 12p.

The company operates in the United Arab Emirates, Algeria, Saudi Arabia and Egypt, where its operational base is located.

It employs more than 1,200 employees and its clients include the likes of Saudi Aramco and Sonatrach, as well as joint ventures involving BP and Eni.

It can call upon nine offshore jack-up drilling rigs, three onshore rigs, a jack-up barge and a mobile offshore production unit.

Ades International CEO Mohamed Farouk

Mr Farouk said: “We have been very successful in getting traction with investors who believe in our story. That was encouraging for us.

“The idea is to position Ades in the very healthy MENA (Middle East and North Africa) market.

“Our costs are low and that gives us access to opportunities. On top of that we have been very aggressive in terms of growth structure.

“Our employees are Egyptian and are paid in Egyptian pounds, we have our headquarters in Cairo and we have a strong technical team doing a lot of in-house refurbishment of assets.

“The idea is to keep growing based on the fact that we have the right market, the right cost structure and also the ability to get the right assets.”

Ades had a $430million backlog at the end of the first half and Mr Farouk said the company had a huge pipeline of on-going tenders, some which will close before the end of this year.

He said the company planned to stick to its core markets in the immediate future.

He said the North Sea was unattractive because the market is over-saturated with competitors.

Those competitors have harsh environment rigs needed for projects in the North Sea, whereas Ades does not.

Mr Farouk said: “The North Sea market is overfilled so that would be quite tough. I’d prefer to keep to our current market and increase our share here. In the next two to three years, I don’t see us going to the North Sea.”

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