Announcing its financial results for the three-month period ended March 31, 2024, Arabian Drilling said the quarter-on-quarter revenue decreased slightly by -2% or SAR20 million to SAR967 million mainly due to higher rig move activity in Q4’23 and one operating day less in February, representing about SAR 10 million in revenue shortfall, amongst other things.

 

The first quarter ebitda of SAR405 million was up +25% YoY, in line with the revenue growth. The ebitda margin improved from 41.5% to 41.9%. Compared to the same quarter of last year, Q1’24 ebitda was impacted by unconventional rigs startup costs of SAR26 million.   

 

Arabian Drilling said the SAR82 million YoY ebitda increase was mostly offset by SAR34 million of additional interest expenses and approximately SAR40 million of depreciation, mainly due to the three offshore rigs and other well control equipment life enhancements. 

 

The higher YoY interest expenses result from the combined effect of increased interest rates, higher gross debt as well as SAR18 million of interest costs that were capitalized in Q1’23, it stated.  

 

There was no change in rig activity in QoQ with all the Aramco offshore rigs fully operational during the quarter, it added.        

 

On its Q1 net income, Arabian Drilling said it surged 3% to hit SAR146 million. The SAR82 million YoY ebitda increase was mostly offset by SAR34 million of additional interest expenses and approximately SAR40 million of depreciation, mainly due to the three offshore rigs and other well control equipment life enhancements. 

 

The higher YoY interest expenses result from the combined effect of increased interest rates, higher gross debt as well as SAR18 million of interest costs that were capitalized in Q1’23.  

 

Excluding the impact of unconventional start-up cost, normalized net income stood at SAR172 million, with a YoY growth of +22%.   

 

Q1’24 Net Income was -20% lower QoQ, mainly due to lower ebitda of SAR 30 million, as described above, with the additional impact of higher Zakat and income tax, primarily related to higher deferred tax liabilities.  

 

The top offshore drilling contractor said the Q1 saw a capex spending of SAR306 million, up 15% YoY with SAR 193 million of the spending related to the initial 10 new unconventional rigs. 

 

QoQ capex was -43% lower, due to purchase and upgrade of spares and well control equipment completed in Q4’23. The total spent to date on the Unconventional Rigs program is nearing SAR 800 million, out of a total estimated spend in the range of SAR 2.2 to 2.3 billion for all 13 unconventional land rigs awarded to date, it added.

 

On the solid performance, CEO Ghassan Mirdad said: "Our teams delivered a strong operational performance on a number of fronts during the quarter. We received an award for the Best HSE Rig from Aramco, successfully re-deployed an idle land rig, and our teams yet again are doing an excellent job on the start-up activities for the Unconventional rigs."

 

"In that respect, I am very pleased to announce that we have just started drilling operations with the first of our Unconventional Rig, ahead of schedule, marking a significant milestone in this important program that will support Saudi Arabia’s energy transition and our long-term growth aspirations," he stated.   

 

"We're making good progress to finalize the terms for the previously announced suspension of our three offshore rigs and are actively exploring opportunities to redeploy these rigs with other clients," he noted

 

Chief Financial Officer Hubert Lafeuille said the group had a strong start to the year and posted solid revenue growth with consistent profitability levels, in line with its expectations. 

 

"Our Q1’24 profitability continues to be unfavorably affected by the start-up cost of the Unconventional Rigs. We are focused on maintaining a sound capital structure to give us the platform to capture future growth opportunities with 2024 being the peak year in our current capex cycle," he added.-TradeArabia News Service