ADES International Holding, a subsidiary of ADES Holding (2382), inked two agreements to acquire two jack-up rigs under contract in Southeast Asia.
It will be acquired from Vantage Drilling International for a total value of USD 190 million (subject to working capital adjustments and other conditions at the time of completion).
Asian Expansion
The agreements will see ADES acquire a jack-up rig dubbed “Topaz,” located in the Malaysia-Thailand Joint Development Area, marking the company’s entry into its tenth global market.
Additionally, acquiring shares in Rig Finance, the owner of the “Soehanah” jack-up rig in Indonesia.
So what
ADES, known for providing drilling and production services to the oil and gas sector, is actively investing in expanding its foothold in Southeast Asia.
The company noted that the region offers promising prospects for achieving strong production growth rates amid rising demand for jack-up rigs.
The acquisition of the two platforms is expected to strengthen ADES’ fleet in India and Southeast Asia, bringing the total number of jack-up rigs in the region to seven across Indonesia, Thailand, and India.
Some context
The firm explained that its ‘Contract Acquisition’ model aligns with its corporate strategy of minimizing risk by acquiring contracted assets.
Vantage will continue to manage the platforms for the next three years, ensuring smooth service continuity without disrupting the operations of clients contracted to the platforms.
This deal also reinforces the global partnership between ADES and Vantage Drilling.
Expected annual earnings before interest, taxes, depreciation, and amortization (EBITDA) from the acquisition are estimated at SAR 150 million (USD 40 million).
The acquisition is expected to be completed within the next three months.
Under the agreement, 10% of the total value of both deals will be paid upon signing the purchase agreements, with the remainder to be settled upon the completion of both acquisitions.
Now what
In an interview with Asharq Business, ADES CEO Mohamed Farouk said that his company has so far captured 10% of Southeast Asia’s drilling market.
He also mentioned that ADES aims for half of its revenue to come from operations outside Saudi Arabia.
This comes as the company angles to diversify its income and bring in dollar-denominated revenue to its headquarters in the Kingdom.
Farouk highlighted four factors driving the company’s expansion in the Indonesia-Malaysia-Thailand triangle:
– Growth in offshore drilling activity in the three countries.
– Competitive labor costs.
– Attractive rig returns of around USD 125,000 per day.
– Favorable contract durations, with a minimum of one year.
