Navitas stock soars as company advances 800V tech for NVIDIA AI platforms
Introduction & Market Context
ADES Holding Company SJSC (TADAWUL:2382) presented its first-half 2025 results on August 3, highlighting operational efficiency gains and strategic expansion despite relatively flat revenue growth. The drilling services provider, which operates 90 rigs across 13 countries, has positioned itself as a leader in shallow water offshore and onshore drilling, with a particular focus on GCC markets.
The company operates in a market where oil and gas are projected to maintain their dominance in the global energy mix, representing 54% of energy consumption through 2050. This long-term demand outlook supports ADES’s business model and expansion strategy.
As shown in the following chart illustrating the continued demand and investment required in oil and gas through 2050:
The offshore jackup market remains tight, with utilization rates for premium jackups at 91% and standard jackups at 86%. This market tightness, combined with an aging global jackup fleet (121 rigs expected to be retired in the next 5-7 years), creates favorable conditions for established players like ADES.
Quarterly Performance Highlights
ADES achieved a record backlog of SAR 29.72 billion in the first half of 2025, with additions totaling SAR 4.5 billion during the period – representing the highest backlog additions recorded during a six-month period in the company’s history. The backlog is heavily weighted toward GCC countries (84%), with Saudi Arabia accounting for 66.6% of the total.
The company’s operational metrics remained strong, with rig utilization reaching 98.6% in 1H 2025, up from 98.0% in the same period last year. ADES also maintained its industry-leading safety record with a Total Recordable Injury Rate (TRIR) of 0.12, significantly below the IADC standard of 0.43.
The company’s financial performance shows resilient revenues and improving EBITDA margins, as illustrated in the following chart:
Detailed Financial Analysis
ADES reported revenue of SAR 3,048.9 million for 1H 2025, representing a marginal decrease of 0.3% year-over-year. However, EBITDA increased by 11.2% to SAR 1,674.5 million, resulting in an improved EBITDA margin of 54.9% compared to 49.4% in 1H 2024.
This margin improvement was primarily driven by a strategic shift toward offshore operations, which typically generate higher margins than onshore drilling. As shown in the following segment breakdown, offshore revenue increased from 76% to 81% of total revenue:
Net profit declined slightly by 3.6% to SAR 388.4 million, with the net profit margin decreasing from 13.3% to 12.7%. Despite this modest decline, the company maintained strong cash flow generation with operating cash flow of SAR 1,650.9 million, up 5.1% year-over-year.
ADES demonstrated capital discipline by reducing CAPEX by 34.4% to SAR 967 million, which helped support free cash flow generation. The company’s strong cash flow conversion is illustrated in the following chart:
The company’s geographic diversification is evident in its revenue breakdown, with 74% of revenue generated from GCC countries. Notably, revenues from Southeast Asia saw significant growth, as shown in the following regional analysis:
Strategic Initiatives
ADES secured several new contracts and extensions during the first half of 2025, expanding its presence beyond its core GCC markets. New awards included contracts for rigs in Cameroon, Nigeria, and Brazil, marking the company’s entry into Latin America and expansion in West Africa.
The company also secured extensions for existing contracts, including two jackup rigs in Saudi Arabia, one in Qatar, and three in Egypt. These extensions contribute to the stability of ADES’s backlog and revenue visibility.
The record backlog performance in Q2 2025 is particularly noteworthy, with net additions of SAR 4.35 billion representing the highest quarterly additions in the company’s history:
ADES continues to focus on operational excellence and sustainability, maintaining a best-in-class safety record and achieving an average Rig Efficiency Index (REI) score of 94/100 with Aramco. The company’s sustainability initiatives span five key pillars: Governance & Business Ethics, Climate Change & Energy, Health, Safety & Security, Environmental Protection, and Social Responsibility.
Forward-Looking Statements
The Board of Directors has approved an interim dividend equivalent to approximately 60% of the Group’s 1H 2025 net profit attributable to equity holders, amounting to SAR 231.2 million.
Looking ahead, ADES provided financial guidance for full-year 2025, projecting EBITDA of SAR 3.28-3.39 billion, which implies organic growth of approximately 8-12% year-over-year.
As shown in the following guidance and dividend information:
With its record backlog, improved EBITDA margins, and strategic expansion into new markets, ADES appears well-positioned to capitalize on the sustained demand for drilling services in its core markets while diversifying its geographic footprint. The company’s focus on offshore operations is expected to continue driving margin improvements, though investors will likely monitor net profit trends and debt levels in upcoming quarters.
Full presentation:
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.