ADES Q1 2019 Trading Update – Strong Start to Year, Full Year in Line with Expectations

LONDON & DUBAI, United Arab Emirates–(BUSINESS WIRE)–ADES International Holding PLC. (“ADES” or the “Group”), a
leading oil & gas drilling and production services provider in the
Middle East and North Africa (MENA), updates the market on its financial
and operational performance over the three months ended 31 March 2019
and on recent positive developments post the reporting period. The
financial information included below is unaudited.

Q1 2019 Financial and Operational Highlights

Financial Highlights

• Q1 2019 revenue increased to US$ 108.7 million, up by 2.6 times
  compared to Q1 2018 (US$ 41.2 million) and 1.4 times versus H1 2018
  (US$ 79.7 million).
• Profit margins are in line with expectations.
• Backlog as of 31 March 2019 at US$ 1.5 billion (FY 2018: US$ 1.2
  billion).
• Cash and Cash Equivalents have decreased to US$ 23.6 million as of 31
  March 2019 (FY2018: US$ 130 million), giving a Net Debt as of 31 March
  2019 at US$ 533.2 million. The decrease in cash was driven by the
  completion of the Weatherford transaction in Algeria and Iraq for US$
  72 million and planned capital expenditure associated with the
  acquisitions.

Operational Highlights

• Recordable Q1 Injury Frequency Rate (RIFR) of 0.28, versus IADC
  worldwide standard rate at 0.68¹.
• Growing Q1 utilization rate of 92% (Q1 2018: 77%).
• Completed the Weatherford transaction, integration on track.
• Secured first deep water drilling services contract in the Egyptian
  Mediterranean Basin using the Group’s asset light model.
• Renewed six contracts in KSA for the recently acquired rigs from
  Weatherford for three years each.
• Secured two new contracts for new-build rigs in KSA for a tenure of
  seven years each.

Recent news flow

• ADES secured additional KSA facility – May 2019, ADES secured
  an additional SAR 540 million (US$ 144 million) top-up to the SAR 525
  million (US$ 140 million) credit facility from Alinma Bank, one of the
  leading Saudi Arabia based financial institutions.
• ADES closes USD denominated bond offering – April 2019, ADES
  closed its offering of US$ 325 million in aggregate principal amount
  of 8.625% senior secured notes due in 2024.
  • Secured a B+ credit rating from S&P and Fitch.
  • Bond proceeds were used for debt refinancing.
• ADES secured new contracts in Algeria – April 2019, ADES
  secured two new contracts for its onshore rigs ADES 2 and ADES 3. The
  ADES 2 contract comprises one firm well and four optional wells and
  adds an estimated backlog of US$ 8 million. The ADES 3 contract was
  signed for two years firm and one year optional and will add an
  estimated backlog of US$ 19 million.

Outlook

Trading in Q1 2019 has been positive and with the addition of
incremental revenues from the now completed Weatherford acquisition and
new Algerian contracts, this will drive sequential progress during Q2
2019.

We are trading in line with current expectations for FY 2019 with strong
revenue visibility underpinned by the contracted backlog.

Dr. Mohamed Farouk, Chief Executive Officer of ADES International
said:

“We delivered a strong operational performance in the first quarter of
the year, significantly accelerating revenue growth which increased by
almost threefold compared to Q1 2018. Our results were supported by the
steady ramp up of utilisation rates and the increasing contribution from
the 2018 acquisitions.
In line with our goal to optimise the
Group’s capital structure and cost of funding, we have successfully
completed a US$325 million bond offering and extended our KSA facility
with a US$ 144 million top-up. Together, these facilities have
strengthened our balance sheet and provide ample liquidity for our
capital expenditure requirements.
Our focus remains on extracting
synergies and properly integrating the recently acquired rigs, tendering
activity and maintaining excellent customer service and asset
utilisation. ADES’ growing order backlog combined with improving end
markets and higher utilisation rates provide significant growth
potential and visibility, underpinning our confidence for 2019 and
beyond.”

Contacts

Enquiries

ADES International Holding
Hussein Badawy, IRO
[email protected]

Instinctif
David Simonson
Dinara Shikhametova
[email protected]