Arabian Drilling’s net income drop unrelated to revenue: CEO

In addition, non-cash items, including depreciation, asset impairment, and debt servicing costs related to capital expenditures contributed to the earnings decline.

Mirdad explained that the company invested approximately SAR 1.9 billion in capital expenditures last year, with the majority allocated to developing unconventional rigs.

In Q4 2024, the company successfully deployed three conventional drilling rigs and 11 of the 13 unconventional rigs last year. The operation of these rigs generated SAR 230 million in revenue, underscoring the positive financial impact of these investments.

Mirdad noted that all 13 unconventional rigs are now fully operational and are expected to generate up to SAR 800 million in annual revenue.

By the end of 2024, ADC had 49 active rigs out of a total fleet of 59, making it the largest drilling contractor in Saudi Arabia by fleet size.

As for his 2025 forecast, Mirdad confirmed that while the company does not anticipate an increase in its total rig count, it may reallocate rigs between the oil and gas sectors to enhance operational efficiency and better align with market and customer needs.

He also underscored ADC’s competitive advantage, particularly in light of national initiatives aimed at increasing gas usage in power generation. Saudi Arabia targets to increase its share of gas in its electricity generation mix to 60%.

ADC plays a key role in the Jafurah field, the largest shale gas field outside the US, which presents a major strategic opportunity for the company.

The firm aims to extract gas with high efficiency, leveraging its expertise and advanced onshore drilling technologies.

The CEO further stated that ADC is ready to address the technical and environmental challenges of shale gas drilling, reinforcing its leadership position in the energy sector.

Regarding ADC’s decision to provide outlooks on a quarterly rather than annual basis, Mirdad explained that this shift was driven by the difficulty of forecasting various factors that could impact operations — positively or negatively — amid rapidly evolving geopolitical and economic conditions.

He said providing quarterly forecasts allows for more precise market assessments and ensures a fairer evaluation of the company’s performance.

For Q1 2025, ADC expects to maintain the revenue at Q4 2024 level, with the potential for a 5% increase.

In 2025, ADC’s primary focus will be maximizing its fleet utilization. To support this objective, the company signed a memorandum of understanding (MoU) with Shelf Drilling Co. to expand its international offshore operations.

“We have already participated in several tenders as part of this alliance and are now awaiting the results, which are expected to be announced in nearly three months,” Mirdad stated.

According to data available with Argaam, ADC’s net profit declined by 47% to SAR 321.4 million in 2024, compared to SAR 604.6 million in 2023. In Q4 2024, net income fell by 62% year-on-year to SAR 70.1 million.