ADES holds course through Gulf disruption

ADES Holding has reported a stronger-than-expected set of annual results, posting a 2% rise in 2025 net profit and standing by an aggressive growth outlook for 2026 even as conflict-linked disruptions in the Gulf have temporarily sidelined some offshore rigs. The Saudi drilling group said the suspensions were limited and likely to be short-lived, arguing that its broader footprint and the integration of Norway’s Shelf Drilling would help cushion the operational shock.

Net profit for 2025 came in at 832.9 million riyals, ahead of the 803.46 million riyals average analyst estimate compiled by LSEG. Revenue rose 7.9% to 6.69 billion riyals, though the picture inside the business was more mixed. Sales in Saudi Arabia, still the company’s largest market and accounting for 54% of group revenue, fell 12.8%, while the net profit margin narrowed to 12.5% from 13.2% a year earlier because of higher depreciation, interest costs and transaction expenses linked to the Shelf deal.

The result matters beyond one company’s earnings line because ADES sits close to the fault line between two opposing forces shaping the regional energy-services market. Higher crude prices would ordinarily support more drilling demand, but the war involving Iran has instead pushed operators and contractors into a more defensive stance, with security risks, slower crew movement, higher insurance costs and disrupted logistics weighing on activity across the Gulf. Reuters reported on March 27 that offshore rig numbers in the region had fallen to about 72 from 118 before February 28, underlining how sharply the operating environment has changed.

ADES has chosen to frame that disruption as manageable rather than structural. The company said a “handful” of offshore rigs in the Gulf had been temporarily suspended because of the conflict, but it continues to expect a robust increase in 2026 core earnings. Last week it guided for EBITDA of 4.5 billion to 4.87 billion riyals, implying growth of 33% to 44% from its 2025 upper-end guidance. In Monday’s results story, Reuters said that target now equates to a rise of roughly 26% to 37% from the 3.55 billion riyals in EBITDA reported for 2025, reflecting the updated earnings base rather than a retreat from management’s stance.

Chief executive Mohamed Farouk has tied that confidence to diversification and scale. In the company’s earlier statement, he said ADES remained confident in its ability to navigate the environment in a disciplined manner. Reuters reported that the group had highlighted 123 rigs across 20 countries in support of that argument, while also pointing to better utilisation and firmer day rates in selected international markets. That messaging is aimed squarely at investors trying to judge whether war-related interruptions are a temporary earnings issue or a sign of a deeper slowdown in Gulf drilling.

There is still reason for caution. ADES’s own results show that even before the latest escalation, parts of the business were already absorbing lower activity. Its onshore segment in Saudi Arabia was hit last year by temporary rig suspensions and softer utilisation. The company now says it expects those operations to resume gradually in the first half of 2026 after receiving restart notices. That should help restore momentum in its home market, but it also shows how dependent regional drillers remain on producer spending decisions and field-level operating conditions.

The broader sector backdrop remains unsettled. Reuters reported that major oilfield service groups with Middle East exposure, including SLB, Halliburton and Baker Hughes, are preparing for earnings pressure as clients delay new work and focus first on safety, continuity and repairs. Analysts cited by Reuters said service revenues generated in the Middle East could fall by 10% to 20% in the first quarter, even with crude prices sharply higher, because a price rally alone does not translate into fresh orders when operators remain hesitant to commit capital.

Yet that same disruption may create a second phase of demand. Reuters reported estimated repair costs to Gulf energy infrastructure of at least $25 billion, with maintenance and reconstruction work expected to generate business for contractors once export routes and site access stabilise. For ADES, that means the investment case is now balanced between near-term interruptions and the prospect of a busier repair-and-redeployment cycle later on.