05/04/2025 03:59 AST
Saudi exploration service provider ADES Holding Co. has entered the Brazilian market through an $85.1 million charter agreement.
The deal, which was made with Luxembourg's Constellation Oil Services Holding, will use ADES' jackup rig, Admarine 511, to support a drilling contract with Petrobras, Brazil's state-owned energy giant.
The agreement marks a significant expansion of ADES' Latin American operations and underscores the company's strategy of entering new markets through alternative contracting models.
The charter, which has a duration of about 38 months, includes an optional 472-day extension that could bring the total contract term to 4.5 years.
The Admarine 511 rig is currently undergoing preparations at the Arab Shipbuilding and Repair Yard in Bahrain ahead of deployment, with drilling operations in Brazil expected to commence in the fourth quarter of 2025.
CEO of ADES, Mohamed Farouk, commented on the new agreement, saying: "We are excited to enter the Brazilian market through this strategic Charter with Constellation to support Petrobras, Brazil's national oil company."
Farouk added: "This agreement not only expands our global footprint but also enhances our business sustainability with a long-term contract that strengthens our backlog and provides extended cash flow visibility."
The company estimates the additional backlog from the charter to be SR319 million ($85.1 million), including mobilization and demobilization fees.
ADES noted that while Constellation will operate the rig locally, the charter structure ensures that a majority of the revenue generated will contribute directly to ADES' profitability.
Listed on the Saudi stock market, ADES saw a 1.23 percent drop in its share price to SR16.12 as of 12:30 p.m. Saudi time.
The deal comes on the back of strong financial performance by ADES Holding in 2024, reflecting the group's continued growth trajectory.
The firm recorded an 80.54 percent increase in net profit, reaching SR816.19 million, up from SR452.07 million in 2023.
Revenues also surged by 43.10 percent year-on-year to SR6.19 billion, compared to SR4.33 billion the previous year.
Earnings per share rose to SR0.73 in 2024, up from SR0.59 in 2023, underscoring improved profitability and operational efficiency.
Farouk further stated that the firm selected the charter model to navigate Brazil's operational landscape more effectively.
"Recognizing the unique challenges of each market, ADES strategically opted for a Charter model that facilitates a seamless entry into Brazil while maximizing profitability and delivering higher returns for our shareholders," Farouk added.
Arab News
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