Arabian Drilling Co. (2381.SE): Onshore performance/cost optimization drive 2Q26 beat; focus shifts to near-term rig recovery; Neutral

Research evidence excerpt

Equity Research

10 August 2026 | 11:37AM GST

Arabian Drilling Co. (2381.SE): Onshore performance/cost optimization

drive 2Q26 beat; focus shifts to near-term rig recovery; Neutral

Neutral-rated Arabian Drilling reported 2Q26 results on August 10th pre-market

open.

Faisal AlAzmeh, CFA

Results came in at Rev/EBITDA with a beat vs GSe/BBg consensus, with the net

loss narrower than expectations driven by onshore strength and early cost

optimization benefits more than offsetting temporary offshore rig suspensions.

Revenues came in +7%/+3% ahead of GSe/cons, as an 8% QoQ step-up in land

activity and a full-quarter contribution from the regional operation partly offset

the impact of >SAR 100mn from offshore suspensions. EBITDA beat GSe/cons by

+5%/+5% and group EBITDA margin of ~33% was roughly in line with GSe and

slightly ahead of consensus at 32%, helped by the cost program launched in

April 2026 post 1Q results. Net loss of SAR 32mn was lower than the SAR

39mn/SAR 40mn losses modeled by GSe/cons, though it moved from profit in

1Q26/2Q25 on loss of high-margin offshore activity. We see the print as

reflective of an operating model that can support margins despite an offshore

trough. The three suspended rigs have already returned to service, which

supports an offshore-led recovery into 2H26.

Roman Reshetnev

+971(4)376-3476 |

Goldman Sachs International

+971(4)376-3423 |

Goldman Sachs International

Fadi Bataineh

+971(4)214-9959 |

Goldman Sachs International

We look forward to management’s conference call scheduled for August 11th at

15:00 KSA time. We expect key investor focus areas to include: (i) the pace of the

offshore recovery, with the remaining suspended rigs guided to return by YE2026; (ii)

durability of onshore margin improvement, as onshore gross margin improved QoQ

to 13.6% from 2.2%, and how much is driven by operational enhancements; (iii)

some color on the size/phasing of cost optimization efforts, and the range the

market should expect for 2H26 impact; (iv) updates on the deleveraging path, with

net leverage at 2.2x flagged as peak for the year and is guided below 2.0x by

year-end; and (v) the FY26 capex and backlog trajectory, with backlog at SAR

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