Arabian Drilling: Q2 First Take: Better than expected aided by strong onshore margins; return of three suspended offshore rigs should boost Q3 and Q4

研报英文原文证据摘录

J P M O R G A N

CEEMEA Equity Research

10 August 2026

Arabian Drilling

Q2 First Take: Better than expected aided by strong

onshore margins; return of three suspended offshore

rigs should boost Q3 and Q4

Overweight

2381.SE, ARABIAND AB

Price (09 Aug 26):SRls82.60

Price Target (Dec-27):SRls99.00

Our Take: AR delivered better-than-expected results with revenue down just 7%

QoQ against initial guidance of revenue to be down as much as 12%. Q2 EBITDA

of SAR 251m was ahead of our SAR 206m estimate and also above Bloomberg

consensus of SAR 242m. The beat was driven by strong margins (13.6% vs JPMest

of 2.5%) in the onshore business, aided by better-than-expected revenue growth

and cost savings. This enabled AR to mitigate, to some degree, the impact of a

SAR122m hit to offshore revenues from rig suspensions, which saw offshore

margins turn negative -6% (JPMest +2.3%). AR guided to expect an incrementally

stronger Q3 and Q4 as suspended offshore rigs come back into operation, with

three having been recalled in July and now all three have returned to service. We

rate AR Overweight as we see earnings geared to a recovering offshore market and

an attractive valuation.

Noteworthy Areas: Offshore/Onshore revenue was down -10%/+5% vs

JPMe, meaning total revenue for the quarter was +1%/+3% vs JPMe/ BBG

cons, coming in down 7% QoQ versus initial guidance for Q2 revenue to be

down as much as 12% vs Q1 due to the expected impact of offshore rig

suspensions. This was hence a resilient performance despite the SAR 122m

impact from offshore rig suspensions.

Onshore gross margin was 13.6% vs 2.2% in Q1, driven by higher revenues

+SAR 57m and cost-saving efforts. Offshore gross margin was -6% vs 32.4%

in Q1, due to the impact of lost revenue from the suspended offshore rigs. Total

EBITDA of SAR 251 was+22% vs JPMe and +4% vs Bloomberg. Net income

of -SAR 32m compared well with JPMest of -SAR 32m and Bloomberg

consensus of -SAR 46m

The backlog stood at ~SAR 12bn

Likely changes to consensus: It is difficult to say at this juncture, but even

allowing for some strong rexcovery in H1, a Bloomberg consensus net income

number of SAR 133m looks high given H1 of -SAR 25m

Peer read across:

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