Oilfield services company ADES International announced today it is planning to raise up to $170m (£133m) when it floats on the London Stock Exchange next month.
The company has set a guidance price of $16.50 to $19.60 (£12.90 to £18.10) per share and is raising the funds to help it ramp up its operations in North Africa and the Middle East. ADES said it was conducting the share placing, which will see 40 per cent of the company offered to investors, “against an opportune industry backdrop”.
The Dubai-based company, which is the largest offshore drilling operator by number of rigs in Egypt, announced its intention to float earlier this month.
The company said that, because it operates in a region “largely resistant” to oil price pressure, it has continued to grow during the oil industry downturn. As fellow offshore operators struggled to deal with a dearth in contracts, ADES’ average annual growth rate between 2014-2016 hit 34 per cent despite Brent prices dropping to a 12-year low of $27.50 per barrel in January 2016.
“Prevailing oil prices have resulted in a large number of quality rigs sitting idle and available for hire or acquisition at what we believe are very attractive prices,” said the company’s chief executive Dr Mohamed Farouk.
He added: “Tapping the equity market now will help us accelerate our expansion plans.”
ADES said it also could benefit from oil companies currently eyeing up deepwater drilling projects in the Eastern Mediterranean and that its strategy of operating wells in “lower-cost, non-harsh environments” partly insulated it from oil market cycles. It added it could offer oil companies lower prices than competitors as it had relatively small overhead costs and employed a “low-cost, largely Egyptian workforce”.
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