ADES CEO: Saipem acquisition to boost long-term earnings

Mohamed Farouk, CEO and Vice Chairman of ADES Holding

Mohamed Farouk, CEO and Vice Chairman of ADES Holding, said the company expects to complete the acquisition of Saipem’s shallow-water drilling business in Saudi Arabia during Q3 2026.

The deal is subject to fulfilling customary regulatory and procedural conditions and obtaining the necessary approvals.

Farouk told Argaam that the deal, valued at approximately $285 million and subject to customary closing adjustments, includes five operating jack-up offshore rigs, three of which are owned and two leased. This is in addition to a backlog associated with the rigs valued at approximately SAR 3.8 billion at the time the agreement was signed.

He noted that completion of the transaction will increase ADES’ offshore rig fleet to 88, including 51 premium rigs. The acquisition reflects the company’s focus on disciplined, value-accretive growth, strengthens its position in the local market, and opens up new geographic markets.

Farouk confirmed that ADES continues to target EBITDA of between SAR 4.50 billion and SAR 4.87 billion in 2026. This is supported by its strong backlog, the commencement of recently awarded international contracts, and the continued integration of Shelf Drilling operations, along with the realization of operational and financial synergies.

The CEO added that the outlook is also supported by operational discipline and the gradual resumption of operations affected by temporary suspensions. He expects the acquisition of Saipem’s Saudi business to provide additional support to ADES’ premium offshore rig fleet and strengthen the group’s earnings base over the long term.

Suspended rigs gradually returning to operations

Regarding the impact of regional tensions on operations, Farouk said some of the group’s offshore drilling rigs in GCC countries were temporarily suspended during Q1 2026.

He explained that all rigs whose operations were suspended in Qatar have resumed work, while the company has received notices to resume operations for two offshore rigs in Saudi Arabia. This strengthens its confidence that activity levels will return to normal as conditions stabilize.

The top executive added that the company recorded non-recurring insurance expenses of approximately SAR 140 million in H1 2026, and expects additional costs related to geopolitical tensions to decline as activity returns to normal levels.

Half of revenue comes from outside the gulf

Regarding Q2 results, Farouk said ADES’ revenue rose 36.4% year-on-year (YoY) to SAR 2.15 billion, despite the temporary suspension of operations having a greater impact on quarterly performance.

The CEO added that the results reflect ADES’ global diversification strategy, which it adopted and implemented at the right time. He noted that the acquisition of Shelf Drilling expanded the group’s presence beyond the Gulf countries and contributed to bringing foreign-currency revenues back to Saudi Arabia.

The mature-field production model and international expansion have become key drivers of growth and profitability amid a supportive oil-price environment. Around half of the group’s revenue currently comes from outside the Gulf countries, providing ADES with a broader, more balanced and resilient business platform to continue growing across different market cycles.

The decline in quarterly net profit reflects the expected impact of integrating Shelf Drilling operations, which have lower profit margins, in addition to a non-recurring insurance expense and the impact of temporary operational suspensions.

The group’s revenue rose 49% YoY to SAR 4.54 billion in H1 2026, driven by the acquisition of Shelf Drilling and strong operational performance across the group’s global offshore drilling platform.

Net profit stood at SAR 374.1 million in H1 2026, down 3.7% YoY, while net profit margin stood at 8.2%, reflecting the expected impact of the contribution from Shelf Drilling operations, which have lower margins, as well as the non-recurring insurance-related expense.

New international contracts

Farouk said ADES continued to strengthen its offshore drilling backlog during H1 2026 by signing multi-year contracts for three jack-up offshore rigs with West Africa Exploration and Production Ltd. (WAEP) in Nigeria, in addition to extending the contract for Shelf Drilling’s Scepter rig with Chevron in Nigeria.

The group also secured a multi-year contract for Shelf Drilling Enterprise in Thailand and a firm two-year contract for Shelf Drilling Victory in Nigeria, with an unpriced extension option for two additional one-year periods.

He noted that the company also signed a new firm one-year contract for Main Pass 4 in Nigeria, with an unpriced one-year extension option, as well as a three-year firm extension for Shelf Drilling Winner in the Netherlands.

The new contracts secured by the group in Nigeria, Southeast Asia and the North Sea demonstrate continued strong demand for the company's assets and enhance visibility into utilization rates and future revenue.

Farouk added that the integration of Shelf Drilling is progressing well, supporting greater commercial coordination and fleet flexibility, while operational and financial synergies continue to be realized.