ADES announces contracts update for its rigs in Saudi Arabia
ADES announces that it has mutually agreed with its client in Saudi Arabia to temporarily suspend operations on 5 from its 33 offshore jack-ups operating in the Kingdom for a period of up to 12 months, according to the company's release. One of the suspended rigs will be deployed to the Group’s recently awarded campaign in Thailand that is slated to commence operations in the second half of 2024, while a second rig is poised for another imminent opportunity in the region.
The temporary suspensions for the 5 rigs in Saudi Arabia shall be effective seven days from the signing date of the mutually agreed suspension notice, or when the work currently in progress is completed and the drilling unit is released, whichever is later. Additionally, the suspension mechanism offers enough flexibility for the suspended rigs to complete the firm and optional terms of new deployments before resuming work in Saudi Arabia post suspension. Finally, the original term of the suspended contracts will automatically be extended for a period equal to the suspension for each rig, preserving the remaining backlog for the respective contracts.
Meanwhile, the new contract award in Thailand and the second imminent award in the region come at higher daily rates compared to ADES’ current offshore average daily rates, translating into a favorable impact on overall profitability. On that front, management reiterates its 2024 financial guidance communicated to the market in its FY2023 earnings report, with a projected full-year EBITDA in 2024 ranging from SAR 2.89-3.04 billion, an increase of c.35- 42% year over year.
The Group will also continue to actively market the remaining rigs globally, in line with its geographical expansion strategy and leveraging the rigs’ high marketability and the solid pipeline of opportunities within and outside the MENA region. With the current tight conditions in the global offshore jack-up market and elevated utilization and daily rates, ADES is well-positioned to capitalize on some of the most attractive opportunities, leveraging its high-quality assets, existing global platform, and access across nine different markets.
