Good afternoon, everyone. This is Mazen AlSudairi from Al Rajhi Capital. Al Rajhi Capital is glad to host Arabian Drilling Q2 2023 earnings call. Welcome all to the call. Now I will hand over to the management. Good afternoon, everyone, and welcome to Arabian Drilling's earnings call for the second quarter, 2023. Our thanks to Rajhi Capital for hosting this call. We have recently announced our Q2 financial results, and the documents are available on our investor relations website. As usual, we must start with a disclaimer, so I invite you to read it at your convenience. Following the presentation, we will be pleased to address your questions. As we kick off this presentation, I would like to take a moment to introduce our speakers for today's call. First, we will hear from our CEO, Mr. Ghassan Mirdad, who will provide an overview of our performance. We'll have our CFO, Mr. Hubert LaFoy, who will take us through the company's financial performance for the second quarter and six-month period. The agenda for today's session will cover different topics, including our accomplishments and analysis of the competitive landscape, a review of our operational and financial performance, as well as forward-looking guidance before we open the floor to your questions. I would like now to hand over to our CEO, Mr. Ghassan Mirdad. Thank you very much for the introduction, Waheed. From sunny London, salaam alaikum. Heartfelt welcome to all participants joining us for this earning call. We will begin with a brief overview of what happened during the quarter. Looking at a glance, we are encouraged by the progress showed in our financial and operational results to close the first half of the financial year. Starting with operation, rig activity this quarter remained identical to last quarter, with 44 operating rigs over a total fleet of 47, which resulted in a utilization rate of 93.6%. Our non-productive time increased slightly. However, our rig maintained a high rig efficiency index of 93.6%, with 25 rigs rated as superior performers. Finally, we have seen significant improvement in our rig move efficiency in the land segment, with 1.3 days saved per rig move in Q2 versus 0.2 days last quarter. On the safety front, I am pleased to report that we have improved our Total Recordable Injury Frequency Rate performance, and we continue to record zero environmental spill this quarter. We also just received 3 ISO certificates demonstrating our commitment to safety processes and environmental prevention. Moving to the financials highlights, which will be detailed by Hubert later, our Q2 revenue of SAR 791 million was in line with that of Q1 on a similar rig activity. Our EBITDA improved by almost 1%, mainly due to improved rig move performance that represented approximately 40 days of additional revenue compared to last quarter, as well as improved cost base, particularly in the land segment. Our Q2 net income contracted slightly by 1% compared to last quarter as a result of high depreciation costs and financial charges. Net cash from operations was SAR 348 million, showing a 26% decrease, bearing in mind that Q1 included a one-off exceptional item for the collection of the mobilization fee of the two offshore rigs, AD-110 and AD-120, that started in Q4 last year. We closed Q2 with SAR 1.8 billion of available cash, which is slightly lower than Q1, driven by the completion of the shipyard activity for our three new jackups that have just started. Shifting our focus to growth, the strategy was-- the strategy we established at the beginning of the year is in now full swing. I would like to recognize our project team that has done an outstanding job to deliver the three offshore rigs safely, on time, and on budget: AD-130, AD-140, and AD-150. This was a key goal for 2023, and all three rigs have started their five-year contract with Saudi Aramco. As announced this week, we were delighted to have landed a milestone win for Aramco Unconventional Gas Project. We have won 10 out of 13 tendered rigs. All 10 new rigs will be new build, and we have already started the procurement activity. The win will significantly increase our backlog, as we will see later. This is a major growth area for our land business, as natural gas is an essential part of the successful energy transition globally. We are excited to be playing our part in it. The major investment to develop Saudi Arabia's gas resources through infrastructure will benefit the economy, employment, and support the government's carbon emission reduction targets, and the production of low carbon fuels. We remain very positive about the business outlook influenced by the recent market and industry developments. Our backlog addition in Q2 includes marginal contract extension and awards. However, in Q3, we expect the backlog will significantly increase, as we will include the 10 new rigs contracts for unconventional gas, and we are in a very good position to finalize the extension of the rigs that are rolling off contract in 2023. As mentioned, our three jackups started operational in July as planned. This was achieved despite major challenges across supply chain, logistics, and human resources. This is testimony of Arabian Drilling team, outstanding performance, and strong relationship with our suppliers. On the land segment, we believe that Saudi Arabia growth will continue to be stimulated by the unconventional projects. Our backlog position decreased from SAR 8.1 billion - SAR 7.6 billion in Q2. We added approximately SAR 150 million to our backlog during Q2, mainly attributed to contract award and extension of four land rigs with SLB and with Baker Hughes. Baker Hughes was added as a new client last year, and our performance and, at, to date, has resulted in a request for more rigs to be added to their fleet, bringing the total from three rigs with Baker Hughes to five. Our backlog, as of today, is 56% offshore and 44% onshore. The additional 10 rigs for the unconventional contract will add a backlog of approximately SAR 3 billion. As mentioned earlier, our REI remains strong. Our non-productive time was slightly higher this quarter. However, the overall 12-month rolling average is improving and going in the right direction. On the rig move front, you will recall that we highlighted in the last earning call, a low rig day saved number. This was due to poor weather and higher maintenance during the last quarter. However, we see on the top right graph, a clear improvement this quarter, and even with a fewer rig moves at 38, we were able to save 1.3 days per rig move. Rig activity and utilization remains stable, as the three jackup will only kick in during Q3. With that, I will now hand over to Hubert to cover the financial highlights. Hubert? Thank you, Ghassan, and good afternoon, everyone. I will just would like to pause it here to see if the slides are, we're in sync on the we're in sync on the slides. Yes? Okay, very fine. Let us start with the consolidated view. We have closed the quarter with a revenue of SAR 791 million, in line with the previous quarter, while reflecting the same level of rig activity. In contrast, the year-on-year comparison is much more striking, with a 25% increase year-on-year. This increase is due to higher rig activity. We have had additional jackups as well as additional land rigs in 2023. Our Q2 EBITDA of SAR 335 million represented 42.4% of the revenue, with a quarter-on-quarter improvement of 90 basis points. This improvement was mostly due to our land segment regaining better operational performance and fewer maintenance activities this quarter as opposed to the last quarter. This EBITDA margin remains in the range of the low to the mid-40s, as expected. We have seen a slight contraction on the net income in Q2, mainly due to higher financial charges, as the SAIBOR rate for the next coupon payment was reset in February. In addition, as mentioned by Ghassan as well, our depreciation costs was also slightly higher this quarter in Q2. On the CapEx side, we have seen an acceleration of the CapEx spending in Q2 versus Q1 due to the completion of the shipyard activities and mobilization of the three new jackups that started in July. In addition, we have also completed a shipyard activities around the five-year recertification of our MPSV AD 20. Now, looking into the segment reporting, let's focus on the offshore first, which is on the left side of the slides. For offshore, we have a flat revenue, reflecting maximum capacity utilization of nine rigs working with no significant change in status or day rates quarter-on-quarter. On the cost side, we have seen a slight increase in the cost in Q2 as opposed to Q1, reflecting some start-up costs for the three jackups, mostly compensation costs related to getting the required drilling crew on board ahead of the start of the rigs. On the land segment, we have a slightly improved revenue, mainly due to less maintenance activities that we have incurred in Q2, compared to last quarters. This represents approximately 52 days of additional day rates this quarter compared to the last quarter. On the cost side, we have seen some solid improvements in the land cost structure quarter-on-quarter, which again, is mostly resulting from a better operational performance on the rig move, as highlighted by Ghassan, as well as fewer maintenance activities that were laid this quarter compared to the last quarter. If you look at year-on-year, the land segments include incremental costs due to the high maintenance activity in Q1 that we have seen, as well as the cost of the retention plan that was introduced in the second half of 2022, which is coming through this year. Moving on to cash flow and net working capital. Our net cash flow generated from operating activities was SAR 348 million in Q2 versus SAR 472 million in Q1. However, as Ghassan mentioned earlier, Q1 included a one-off exceptional item related to collecting the mobilization fees of AD-110 and AD-120. Now, excluding this item, our Q2 normalized cash flow would actually sit higher than that of Q1. We expect this cash to deplete quickly over the next 12 months as we are building the 10 new rigs for the unconventional contract. Our net working capital, which is on the right side of the graph, was unusually low at the end of Q2 at 5%, sitting at 5% of the revenue, which is mainly due to an increase in our trade payable. The DSO by itself was stable at 68 days. Finally, looking at our net debt and our leverage ratio, we have increased our net debt position by 23% between the end of Q1 and the end of Q2, which basically represents the change in the cash position quarter on quarter. There was no change in our total borrowing position other than the portion of the accrued interest for the periods. Alongside the future cash depletion that I just mentioned, we can expect the net debt to significantly increase over the next 12 months to fund our CapEx, and we expect to draw on an additional bank facility that has already been secured at a very competitive price. Our net debts to EBITDA of 0.7 continue to be healthy, but will increase as we enter the execution of our next CapEx growth plan with the 10 new build rigs. Now, moving on to the guidance. Our revenue guidance remain unchanged at 3.3, between SAR 3.3 billion and SAR 3.5 billion for the full year 2023. Let me add here that this guidance does not include any revenue stream for the new 10 rigs that will materialize only next year. The full EBITDA margin is set to remain at the current level. We are updating our CapEx guidance to include the portion of the CapEx that we expect to spend in 2023 related to the 10 new rigs. Therefore, we now believe that our CapEx spending for the full year of 2023 will be around SAR 2.2 billion-SAR 2.4 billion. Finally, in terms of dividends, the board has recommended a dividend of SAR 2.53 per share, based on H1 net income, which is consistent with the previous guidance. This dividends will be paid out in Q4, subject to the shareholders' approval. This concludes my section. I will now hand it over to Mazen from Al Rajhi Capital for the Q&A session. Thank you for the comprehensive, presentation. Now we start the Q&A. I see Saleh. Saleh, you are unmuted, you can start. Even during management and capital for hosting the call. This is Saleh Alrakaf from GIB Capital. I have only one question regarding the onshore revenue. So, as you mentioned, that onshore revenue increased Q over Q by 2%. This is mainly due to the less maintenance days. However, the number is still below Q4 revenue by around 4%. And I think this is mainly linked to the days savings, which was 2 days savings in Q4 compared to 1.3 days in Q2. So, Can you just shed some light on the near, normal levels in terms of days savings, given, I mean, we have been seeing a quite fluctuation in the past quarters in this ratio? Oh, I'll, I'll take that, yes. There is, there is one change in the rig activity. If you look at Q4 compared to Q2, which is AD 29. AD 29 was a, was a land rig that was working during the full of Q4. If you, if you remember the call that we had last quarter, we said that AD 29, the contract was terminated, and we deployed AD 29 to first drill a couple of rigs for SADA, for the Saudi Arabian Drilling Academy, and then we'll use AD 29 as a, as a training facilities. The difference will also come mostly from the, from, having taken 1 land rig off in Q2 compared to Q4. You were right. We had a lot more rig moves. There was a lot more days saved during the Q4. As well, you know, February is two days less of revenue as well. Okay, thank you very much. That's it from my side. You're welcome. Thank you, Saleh. Now we'll start with Akarsh. You can start. You are unmuted. Congratulations on the results, congratulations on winning the new Jafurah tender. I have three quick questions. First one is, if you can share what is the CapEx requirement that you'll have for the 10 new rigs, since these will be newly built? The second question is, if you can share the EBITDA margin for the leased rigs, the AD-110 and AD-120. Third question is, I'm new to the sector, a general question I wanted to ask, what happens when, let's say Aramco or let's say Saudi Arabia announces that there'll be a production cut that we'll be doing for oil? In that case, what happens to the drilling? Do you keep drilling and get, keep getting revenues, or is there-- will there be a decline that can happen? These three questions. Okay, let's start one by one. The acquisition cost? Yes. Yeah. you want me to- Go ahead. Look, look. In terms of there are different rigs in the 10, I mean, this 10 rigs package, it's different types of rigs. You have rigs that are skidding. You have rigs that comes with higher spec in terms of well control equipment. To be in the ballpark, I would say that, you know, the acquisition cost or, sorry, the building cost of those rigs is about from $40 million-$50 million each. This is the kind of, this is the kind of CapEx that we'll be looking at deploy over the next 12 months. You had a question on the, you had a question on the EBITDA related to the, related to the offshore. 1/10/2020. Yeah, 110, 20. 'Cause they're, bareboat charter. Yeah. Those are the, those are the two rigs that are... Those are the two rigs that are bareboat charter. They start the contract in Q4. We, we don't particularly, you know, we don't particularly disclose EBITDA at, at rig level for confidential, confidentiality purposes. What I can tell you is that... I mean, I don't know how much you know about the, the, the drilling sector, but offshore, the offshore EBITDA is, is basically accretive to the overall EBITDA of the company. Yeah. I just wanted to have an idea, but that whether these rigs are, like, getting more margins than your mid-60s for offshore, or are they, like, lower than that? Just to give, just to have an idea. Those rigs were contracted at their rate, which were north of SAR 100,000. They are, you know, they are getting the EBITDA that you would expect one rig in the market would get in those days. Oh, thank you. That's helpful. I mean, just to add to what Hubert said, the reason why is we managed to secure it during, you know, as, as bareboat charter during, during COVID. Yeah. It was a good, good pricing as well. On, on the, on the last question, in terms of, you need to understand the way our client, Saudi Aramco, which is the biggest client, producer in the world, they don't react to these small changes that happens every now and then. They set a plan, which is, you know, the Saudi Aramco wants to go to 13 million barrels per day, sustainability, sustainable. They don't get affected. This, this is a goal that needs a lot of drilling, so they don't get affected with cuts. We don't see when you have these small cuts that happen during the OPEC or OPEC + affects the day-to-day business, 'cause these are long-term plans that Aramco decides, and they march straight. Thank you. That's helpful. Thank you, Akarsh. Now we'll go to Ricardo. You are unmuted. Ricardo? You are unmuted. You can start. We can't hear you, Ricardo. We'll come back to you, okay? We'll come back to you. Now we can go to Abdellilah. Hello? Hello. Yes, we can hear you. Can you hear me? Yes. Yes. Salaam alaikum. First of all, first of all, congratulation on the strong set of results. I just have a couple questions. The first one is more of a high-level question. Given where the tight market on offshore and, and the increasing demand on onshore rigs-... I just wanted to ask from the management view, what would be the scenario that would take day rates lower over the midterm? So that's my first question. The second question, if you could- Can you repeat the first question, please? Just to make sure I understand you. We continue to see a hike on the day rates. Okay. across offshore and onshore. I, I just want to get the management view. If we were to reverse that direction and we start to see declining day rates, what would take for that reversal to take place? Okay. That's the first question. The second question, are you anticipating that the cost, the operational cost per rig for the unconventional rigs to be any different than the onshore conventional rigs? Very, very good question. Let me tackle the first one. If we split the segment, offshore and land, to discuss on the rates for, for the first question. For the offshore, if you look at, Saudi today, Saudi Aramco have secured the rigs that they want for offshore. There is not much available rigs in the market at a global level. Saudi Aramco managed to secure the rigs that they want for offshore. The only reason that the price will go continue going up in Saudi, is if Saudi Aramco requests more rigs, and because there is not enough rigs in the market globally, then that will push the price up. We don't see. I think, I think Saudi Aramco have secured the rigs that they want, so I don't see this going forward in Saudi. However, if any client at a global level is requesting for a rig, the rigs are, it went up also to $180 or $190 outside of Saudi. The reason why, one, is there is no availability of rigs. Number two, the usual contracts, at international level, they're not, they're not on an annual, like three years, four years, five years. The contracts are four wells. There's a huge investment from the contractor, contractor, the drilling contractor, to provide the rig only for four wells or two wells. That's why the price is a lot higher than here in Saudi. On the land, on the land, it's, it's, it's very competitive and, and it's, it's, I don't see there gonna be a spike up or down on, on, on the rigs for, for the land. I mean, we see a single digit increase, and I think that's mainly of support of inflation more than, not more than that, to be honest. I think there was a question on the OpEx or on the OpEx for- Do you want to start, then I'll add? Look, I mean, at this point in time, we have modeled the OpEx for the unconventional to be the same as the conventional. Saying so, saying so, we believe that there is potential upsides in terms of economy of scale, synergies, et cetera. It's just that those upside at this point in time are not, are not known because we haven't, we haven't really tested it. You, you want to add? Yes. This win is our first penetration to the unconventional. It's very, very key for us, specifically, that we are gonna see growth on the land. There will be more work to be added, more rigs to be added on land. If you look at factory, you know, when in the unconventional, it's factory drilling. When you have this kind of factory process, you can eliminate a lot of cost or fat on the organization. This is what we didn't model yet. Once we have the rigs, and we start operating and having a factory drilling, then we can see how much we can save some of the costs that we usually use in a conventional rig. As mentioned by Hubert, today, we just modeled the cost as per a conventional rig. Yes, thank you very much. You're welcome. Thank you, Abdelillah. Now we're back to you, Ricardo. You are unmuted. Unfortunately, we can't hear you, Ricardo. Between the new mic. Sorry. Yes. Can you hear me now? Yes, we can hear you. We can hear you. Okay. Sorry, I had some, some issues with my connection. Thanks for, for taking my question, Ghassan and Hubert. First question is on the new contract. I just wanted to get some, some color on how was the competition for those rigs? You did a phenomenal job on getting the 10 rigs out of 13. It's a lot higher than your standard share on the land rigs in Saudi. How do you see the, the competition? Two follow-up questions is, the first, on the press release, you mentioned that those rigs should start generating revenues in the second quarter of next year. How do you think about the timeline for the general revelation, or the most on the second, third quarter, or is it more spread out? The final question on, on my side is, how to think about execution from Arabian Drilling Company, as now you have quite a significant backlog and a lot of new rigs to enter, operations. What would be your appetite for incremental contracts in the, in the short to medium term? Thank you. Okay, that was a lot of questions. Yeah. The first. Was about the competition. I think, I mean, being in this unconventional is, I think it's key for any drilling contractor. So a lot of the contractors who exist in Saudi, who have participated in this. I think it was key for everyone. And I think the strategy team, we've done a good job in terms of putting ourself in the right spot to win to win 10 out of 13. Now, this 10 out of 13, just to understand, half of it is skidding, which is the unconventional factory drilling, and the other half is conventional, is in the unconventional group, but to explore for unconventional fields. What was the other question? There was a question on the revenue flow. I guess, I guess the revenue flow is... The, the first rig, there it's a phase delivery, right? Not all the rigs are gonna come into the first. We expect the first rig to start coming in Q2, there's gonna be a phase, it's gonna be a phase delivery of the rigs. Each of them has a different delivery date. What we meant is, you know, the full... I mean, the, the fund of the revenue will really hit, will really hit- H2. -H2, right? There's not gonna be any, any, substantial increase, related to those rigs in Q2. It's just we'll start, we'll see the first start, the start of those first rig in Q2. The arrival will be, you know, Q2- Yeah. The revenue stream will start in H2. Yeah. Yeah. there was a third- There was a question on the execution. With all this backlog, how are we going to execute? Yeah. I mean, this, this is a very good question. I mean, if you look at the supply chain, the suppliers, the, and managing the inventory, human capital, making sure you have the right crews, this is, it's, it's a constraint on the whole sector, not only on drilling contractors. Drilling contractors, service providers, and as well, our clients. The good thing, as, as mentioned in my presentation, our strong relationship with our suppliers played a key role in the offshore to deliver the offshore on time and on budget. I think this will, will come again with the, with the 10 rigs. The other part is human resources. If you look at our headcount on the rigs without the, the offset, which is the transportation, we are, we're shy of 5,000. If you want to add, the 10 rigs, each rig, let's say, take or give 75 employees. 75 multiplied by 10, that's 750 crews, I mean, the team that needs to be added for the 10 rigs. You're talking almost 16%. Yeah. -of my population is gonna be increased. And I just added as well the three rigs. You can imagine the amount of people that are recruited and trained. Today, we're focusing huge focus on training. AD 29 is purely now focused on new crews coming in, getting the right exposure before they get deployed to the field. As well, we have just acquired, I mean, this was last week, we just acquired a new facility to cater for our training. We acquired it as Arabian Drilling, it'll be announced on social media. This is one bottleneck that we think we can debottle because of we control the training ourselves. That's very clear. Thank you. Thank you, Ricardo. Now we'll go to Ibrahim. Ibrahim, you are unmuted. My voice clear? Yes, we can hear you. Okay. Okay, sounds good. Congratulations, management, on securing the SAR 3 billion contract. Thank you. My two question is regarding the. If I want to see the growth and the revenue from onshore side. Since last year, you renewed almost 21 rigs, if we can see the growth from year-over-year, it's almost 5%, as mentioned by my colleague before. Also I want to see. If I'm not mistaken, you renewed at double-digit growth from the last contract. I want to see what's, is there effect from that side? I don't see margin are responding, especially operating gross margin is increasing by almost 40 basis points. I want to see. I want to hear from you. Yes. Like, can you shed a light from that side? Let's answer this question. We don't-- Just to make sure. You're right, the double digit was in the offshore market. On the onshore market, was a single digit. It barely covers the inflation. You know, mid to high single digit, the landing. The double digit was on the offshore that we had, just to clarify. That's correct. Okay. Absolutely correct, yeah. It should make margin better, right? Since your cost is the same. Well, the cost is not, the cost is not exactly the same. What we've said is, we've said we've seen on the land side, we've seen, you know, a high, you know, mid to high single-digit increase on the day rates. We also have seen, you know, a similar increase on the, on the cost side as well. There is not. Yes. substantial difference. I mean, year on year, there is no substantial difference on the land margin. Yeah. The offshore is a completely different story, but on the land, it's, you know, it's the, there is not any substantial difference. I think more, most of the single digit increase was wiped out with the, with the inflation that we've seen. Yeah. Mm. Sounds good. Okay, my second question is regarding when we had the Q1 call, you mentioned that the new, the new, renewals, you will talk about in August, if I'm not mistaken. Yep. Yes. Is there any update from that side? Yeah. We have, ... six, six, seven. Five, we have-- we are- Total of six, okay. Yeah, we have a total of six rig drilling of contracts. Yeah, out of which, yeah. We have total six, out of which five were in the final, final closure to be renewed. I think this will be... I mean, once, once it's renewed, we'll announce. They're in the final, final signature state. One will be-- still is gonna be kind of afterwards, right? The one, the last one. Yeah. The, the two is with Saudi Aramco, and the sixth one is in Khafji. It's as well, It's in the two, it's, it's in the negotiation phase to renew. I mean, overall, I mean, we're very confident those rig will be extended. Mm-hmm. it, it will be the same thing, like there is no margin from that side because it will be related to- Yeah. -compensation. Yeah. Out of the five, four are land. You're right. You're correct, and 1 is offshore. The offshore will have, will have a, a better increase than, than the land. Correct. If I'm not mistaken, Sir, San. In the report, it mentioned that 2023, six lands and two offshore site. Six land? Yeah, six land. Contract ending date by year. In 2023 and two in 20-. Let me go back to the slide. We're going back to the slide. Yes. Yes, six land and two offshore. Yes. Mm-hmm. Yes, you're correct. Out of the eight, seven, the land and one offshore is with Saudi Aramco. That's gonna be in the final stage. One offshore with KJO, which is Khafji Joint Operation, that is taking a longer time to sign, but will be signed this year as well. Okay, sounds good. Thank you. Of course. Thank you, Ibrahim. Now we go with, Jonathan. Jonathan, you are unmuted. Good afternoon. Thank you very much for the presentation. You're welcome, Jonathan. Thank you. Congratulations on the new contract award. Your voice is unclear, Jonathan. It's unclear. Can you hear me better now? Yes. Yes. Yes, much better. Yes. Okay. We lost you. He's not here with us. We'll go with Ibrahim. Ibrahim, you are unmuted. Hello? Hello. Am I audible? Yes, Ibrahim. Salaam alaikum. Great. As-salamu alay- wa alaikum as-salam. I'm Ibrahim Atiyah from Ashmore, Saudia. I do have a few questions. The first one, just follow up on my colleague, Ibrahim's question, the margin profile. So just for the fact that we have two segments, each has different margin profile. The onshore versus the offshore one is the 30s, one in the 60s. Just for the fact that offshore contribution increased from 28% - 38%, I would expect higher margin than what you reported during the first half, or higher margin expansion than what you reported. So am I missing something? Is there certain one-off fee? You mentioned the pre-operating cost as well, and you mentioned also that the land rig margin is flat this year-on-year because the inflation in cost is compensated by higher day rate, et cetera. Yeah. What is the story in the offshore, if the pressure is coming from the offshore, other, other than the pre-operating expenses? That's the first question. Okay. Yeah. No, you're absolutely right. I mean, we have seen some pre-operating. You know, I mean, to start up, to start up the, an offshore rig is, is not a walk in the park. I mean, you know, you have to have the crew ready, so you have to get, you need. There is a lot of pre-operating costs that are hitting the P&L months before the revenue stream starts flowing. You have seen that, you know, you have seen that in H1 as, you know, as we started 130, 140, 150, that just started, that just started in July. You have a couple of months where you. The costs are hitting you, but you're not getting the benefit of the revenue. That's one thing. The other thing as well is, I think that, you know, we have seen some cost escalation as well, particularly on the offshore. The offshore, I mean, the manpower of the offshore, I mean, I think Ghassan has alluded to that, but it has become a very, very scarce resources. One of the things that we did in particular, we have introduced a retention plan. Yeah. just to make sure that we keep the key people, that we keep our key people offshore. It's a combination, it's, it's a combination of those two, those two elements. Saying so, the pre-operating costs, are a kind of a one-off. I mean, you know, once, once you have your crew and everybody's working on the rig and you get your revenue, then, you know, it's, it's, it's business as usual, I would say. Yeah. You want to add... No, if I would add, I mean, we, we had to put a very strong retention plan because we've seen our competition, who's growing very fast in, in Saudi. They're finding it difficult to find good, good candidates, and the best place to come to is Arabian Drilling. They're trying their best, and we're trying to put a good, sound retention plan that is, you know, phased on, on, I think, two years. So- To retain them, this is that kind of affected our cost as well. Very clear. Just a follow-up question before moving to the second question. I, I know it's too early to think about next year, but what sort of market profile we should expect next year, assuming everything is normal? I mean... I think you answered to the question. Yeah. I just want to look at the normalized stuff. I don't wanna miss the, the performance, the great potential that the company has. I, you know, I think, you know, I mean, really, we are in a very intense growth phase, right? I mean, you know, this year is not business as usual. Next year will not be business as usual either, because we're gonna start up those 10 rigs. It's very... Honestly, it's very difficult to answer to your question, what is business as usual? Yeah. Because it's, it's not I don't think that next year is gonna be business as usual either, right? Yeah. Yeah. It's just... You see, I mean, we have H2. I mean, H2 is not gonna be, I mean, better. I mean, we're gonna have some- Same level. Yeah, same level, because you have this, the, the start of the three rigs, that will take a bit of cost, and the rigs will be a bit, you know, they will not be 100% efficiency because it's a new crew together. Then you have to recruit and train. There is a lot of cost that's gonna impact you next half of the year because of getting ready for- The unconventional. The unconventional, and then starting those in two, you know, Q2, there's gonna be a lot of costs that's gonna impact. I think it's too early to say. We, I mean, we have to model this in Q4 to see how it's next year. Yeah. I mean, I don't think I mean, the growth on revenue is in the high teens, I think, from a revenue perspective. I mean, yeah, from a revenue perspective, we see a growth year-on-year in the high teens. Yeah. you know, we won't reach a business as usual until we are into the second half of next year. Yeah. We're gonna have some, we're gonna have some extra pre-operating costs, and, you know, we're gonna have to, we're gonna have to model them. Where are we going to land? I mean, you know, whether it's gonna be, whether it's gonna be, you know, you know, where we're going to land is a bit early. What we can say is that, I mean, for, for As, as Ghassan mentioned, for, for this year, you know, we see the, the, the, the EBITDA level that we have, reported at H1, we see the same, we see the same EBITDA level for the rest of, for the rest of 2023. Clear. Clear. Thank you. Second question is related to the unconventionals. Probably quite long question, and it was partially answered by the OpEx side. First, we see the CapEx side, it's quite higher, SAR 45 million, compared to the average conventional land. The CapEx side, side is higher. OpEx probably might be the same, but what about the day rate, just for you to end up with the same IRR or the same ROI? What would be the day rate compared to the conventional land rig? Based on the quick calculation of the SAR 3 billion, the daily revenue rate, not the day rate, daily revenue rate would be around SAR 42,000-SAR 43,000, based on my calculation. If you can elaborate, please. Thank you. The SAR 3 billion is the total revenue that you can get out of the contract. Okay. It is, it is the rig rate, you have the mobilization, the rig moves, plus extra charges that we have to the client. It does not. If you take all of this and divide it by the rate, it does not give you the day rate. What we, what we see that, you know, what we see in the backlog, we look at only day rate. Only day rate, and then, we see that around, you know. shy of SAR 3 billion. Shy of SAR 3 billion. Yeah. You're not, you're not, you're not off, but I think it's in the, you know, 40s plus. Yeah. You know, you're not, you're not very off. The only the day rate component? Yes. yeah. The day rate, the day rate component is in the 40 plus, low 40s? Low forties, yeah. On average, right? Because there's different type of rigs with different- Yeah -features, et cetera. I'm just talking about an average, right? Average of the 10 rigs. Average of the 10 rigs, right? It's still, it's still higher than the average of the land segment, right? I think we have already disclosed on a number of calls that, you know, we have an average of the land segment at the mid-30s. We're still higher than the average of the land segment. The expected EBITDA coming from that particular 10 rig package is accretive to the overall EBITDA of the land segment. Great. This is 20% roughly premium over the conventional land, and it's accretive from a bid perspective. From a day rate, yeah. Day rate, yeah. Yeah. Yeah. May I ask the third question or? Yeah, yes. Please, go ahead. Yes. Perfect. I believe that last quarter you mentioned that the first phase of Jafurah was around 13 land rigs, unconventional land rigs, yet you, you have been awarded 10. Is this 10 out of the 13? Yes. How many phases, how many 13 you would expect from Jafurah? I mean, so what we, what we know, so there is, there is around, you know, just shy of, I mean, 20 rigs plus us is, plus the 13. You have, you have, you know, 30 plus. I mean, what we, I mean, our knowledge is, you know, we might go up to 40 or 80 rigs for the unconventional. This is, this is gonna be scattered, staggered, so it's not gonna come all the time. Now we had the 13 tenders. We don't know if there is. We know there will be more tenders, but we don't know when and how big is each tender. It doesn't have to be every time it's 13, it can be five, it can be 10, depending on, on the request of our client at the end of the day. Sorry, the 40 to 50, is your share of it or no, the total, right? No, this is the total. Yeah, yeah. Total. The total. Your share of it should be higher than the normal land rig, 17%, or should be higher? No. I, I don't know if you were with us in the, in the pre-IPO, then the plan is to see what is right for our shareholders and the business growth. We're not fixed to the market share. I'm not like, "Because I need to keep this market share." What we need to do is we need to make sure that what is the best to have the best return to our shareholders, that we look at. Now, today, we got, we got 10 of, of a market of 30%, but, I mean, we know it's gonna grow. The, the pie or the number of rigs are gonna be on the unconventional, can be 70-80, maybe more. It all depends on our clients. Okay, great. Fair enough. Thank you so much. Thank you. Okay. This is very helpful. Thank you. You're welcome. Thank you, Ibrahim. We'll go back to Jonathan. Please, you are unmuted. Can you hear me? Yes, sure thing. We can hear you. The chat before basically asked the main question I was gonna ask. Another question, you announced the interim dividend for the first half. Yes. Assuming that you make higher earnings in the second half, which I think would be a reasonable assumption to make, would that mean that the likely dividend for the second half of the year would be higher? You know, in terms, in terms of dividend, I mean, the board, the board will proactively review the dividends, and make the recommendation to the shareholders in a, in a way that makes sense and, you know, kind of balance the sustainable growth with the returns, with the returns with the, with the shareholders. You know, at, at this point in time, we cannot, we don't, we don't speak on behalf of the board. Okay, thanks. That's it from me. Okay, Jonathan. I'll get back to you, Mohad, but I have a question in the chat box. Is from Fahad Al-Saad, saying, "Aramco is set to cancel, a mid, mid-year month, offshore contract for Zuluf expansion. Is Arabian Drilling open to bid for the contract and acquire the asset? No, not, not really. We didn't have any plan to do that. Thank you. Okay, we go back to you, Mohad. You are unmuted. You can start. Time. I'm just trying to understand if there are any risks for the unconventional rigs coming in in the second quarter. Like, like, my understanding of natural gas is like, you know, gas comes with oil. You have to do something with it, either burn it or transport, store it. If, if you're saying that it might begin at the second quarter of next year, is, is there any risk of delay maybe or something like that? Cause there has to be, like, infrastructure, right? Either you store it, transport it, or something like that. Okay. In the drilling, we drill the well regardless if there is a facility or no. Mm. We drill the wells, and the client will have another team, which I think PMT, project management, who will connect these wells to a production facility. Regardless if you have the facility or not, you drill the well, and the well will be ready for production whenever you want. What we're saying, H2, you'll start seeing revenue. I mean, the rigs, as you said, will start arriving in Q2, getting them ready, getting them inspected, approved by the client, and moved to the well site. This will take time, and that's why you'll see the revenue in H2. Drilling the wells has no connection with the facility. Very clear. you don't have any risks from that- Yes. point of view? Yes. Yeah. Okay. Thank, thank you very much. You're welcome. Thank you, Mohad. Ricardo, I'm seeing you raise your hand. You're unmuted if you want to ask. Okay, Pritish, you are unmuted. Please start. On the SAR 3 billion contract win. Sorry, your voice came a bit late. We didn't hear the whole question. Can you start from the beginning, please? Okay, sure. I wanted to understand what would be the mobilization costs for the rigs on a per rig basis. Is pre-operating cost a part of this mobilization cost, or that's completely different? That's on the first question. On the second question, would SAR 25 million per rig would be a good estimation of the mobilization revenues, which you said is already a part of the SAR 3 billion, right? Generally, what we have seen is, mobilization revenues-- I mean, mobilization revenues are high margin, right? Won't they completely offset any other costs that usually incur in the pre-operating stage? Basically, what I'm trying to say is- Mm. Would, would the margins really be quite low when you start off? These two are our main questions. I'll come back with another question after you answer. I'm gonna answer, I'm gonna answer that, Pritish. Basically, you know, there are three types of cost and, and, and there are three type of different accounting treatment. I mean, you have the project cost, which is the people that are actually, you know, the project team building those rigs. This is all capitalized with the rig, and it's, it's capitalized over the life of the asset, which is 20 years. You have the costs that are attributable to the mobilization of the rig, which is basically bringing the rig from wherever it is, whether assembled, manufactured, and assembled on the first well location. This cost is being amortized and deferred over the life of a... ver the primary term of the contract, which is, in this case, in five years. And then you have some pre-operating costs, which are, cannot be either deferred or capitalized, and this is, for instance, you know, when we hire the crew. So we hire the crew for all the rigs, and then we deploy those crew on all the rigs that we have to make sure that they're trained and, you know, they're shadowed by, they're shadowed, they're mentored, et cetera. And that cost is not capitalized, it's not deferred, it's just part of the regular OpEx of, it's just part of a regular OpEx. So these are the three, these are the three sets of, these are the three sets of, sets of costs. standpoint, I mean, we believe that the cost of the mobilization will be fully covered by the mobilization fee Okay. Could you give us an estimate of what would be the mobilization revenue per rig that you would receive when these rigs are deployed? I think we can back calculate in the past, maybe it's like SAR 25 million. Would you say that's the same for a non-conventional gas-based rig? I mean, I- This is not- We cannot, we cannot discuss. Unfortunately, we cannot really discuss. This is a bit confidential, but let's say that let's say that, you know, it's as I said before, you know. It's enough to cover the cost. It's enough, it's enough to, it's enough to cover, it's enough to cover the cost. Yes. Okay. Thank you very much. I understand that. One last question on the total number of rigs. As you mentioned, there have been, like, tenders put out for 20 + 13, around 33, 35 rigs, and half of this is done. Do you think we could see another tender as soon as, say, 2024? Or do you think, no, it's like a 2026, 2027 story? Just trying to see. You also mentioned that you would win in... I mean, the tenders would be in staggered basis, but any indication of, you know, when probably the next one will come? Thank you. Are you, are you referring to unconventional again? You're still on the unconventional, yeah? actually, you could help us with unconventional and conventional. I mean, I mean, it's the, the, the unconventional, sorry, the conventional, there is not a clear sight if how many yet that, the client wants to add rigs for that, to be honest. There might be a tender here or there, but they're not the real growth that you want, to look at. What you need to look at that really, I mean, like the unconventional, that's gonna go from 30 - 70 rigs. There is a big jump, you know. It's not like two rigs here or three rigs here, there. The unconventional, you're right, there will be tenders. We're, I mean, we're not sure. I mean, just to give you an example, I mean, when we forecasted for the IPO, we had the plan of a certain number of rigs, but the unconventional was not part of the plan because we did not know when it's gonna come. It came sooner than we expected, the tender. It all depends on the plans of our clients and how fast. Now, we know they want to develop this field very, very fast, but, you know, it can be early, early next Q1, or it can be midyear next year. It's, it's up in the air, to be honest. All what we know, it's, it's high on the agenda of our clients. Okay. Thank you very much, Ghassan Mirdad. That answers my question. Thank you, Mazen AlSudairi. Thank you, Pritish. Now we'll go with you, Saleh. Saleh, I'm seeing Saleh want to ask. You are unmuted. You are unmuted, Saleh. Yeah. Hello again. This is Saleh Rakee. I have a follow-up of one of your answers. You mentioned that H2, a bit, that should be similar to H1. I, I just want to know how is that, since you are adding three new jackups? Yeah. I'll, I'll, I'll, I'll explain then. We, we see that there will be some, a couple of one-off costs that's gonna happen in H2. One is some of the costs, you know, you have, you have-- When you start a new rig, there is a bit of extra cost, they call it startup cost, for the rig to start and, until the crew is aligned. Because you have a, you don't have full crew on the rig that needs to kind of gel together, so it takes a bit of time. This is for the 3 offshore rigs. The real major cost, that I was trying to explain, you know, There is a huge headcount that you, I need to add. 16% of my headcount needs to be added just to be ready for the 10 unconventional rigs. This headcount that's gonna be added, there is no revenue against it. Not only the headcount, the headcount is gonna be added, and then you're gonna really expedite the spend on training and development to make sure they're up to speed and ready for the operation when it starts. You know, for the rigs, it's, you cannot train someone over a week or two. You really need to put him, you know, for a couple of months to get acquainted, experienced, and knows, has good knowledge to be part of the crew on the rigs that's gonna start the 10 rigs. We see this cost that's gonna happen in H2. Many thanks. Very strict. Okay, thank you, Saleh. Okay, Danny will be the last. For the last, I will take Naif, then Dana, and you will be the last participant. Thank you. Naif, you're unmuted. You can start. I have a question more on the business side, and please, clarify if I, if I'm mistaken on this. Aramco's policy, your key client, is basically they try to maintain their reservoir, right? If they're gonna produce one barrel, they're going to drill for one more barrel. My question becomes, is in Q3, for example, we're gonna have oil production of roughly 9 million barrels a day. If, if we exclude, basically, their plans on the increasing the maximum sustainable capacity, then, logically speaking, shouldn't the utilization of rigs fall? If, Theoretically, you're right. You have to understand is when you explore Let's say, for example, you produce one barrel, and you want to explore for, for that barrel that you produced. Not every well that you drill, you have a success. So you really need to continue drilling. That's one element. The other element, the, you know, the decision to drop production in. This is, this is minor in the whole scheme of things when you manage a reservoir and try to find more reserves. It's a small changes that Aramco is, is very, very, you know, long-term planning. They don't look at these small ups and downs that affects the day-to-day operation. I hope. Did I answer your question? Naif. Naif, clear. It's, and just to be clear, it's not a, a straight calculation. Sure. You drop production, then drop the drilling. It's, it's. Correct. It's not, it's not correlated straight up to it. Okay. No, no, no, that's, that's clear. You're saying in the grand scheme of things, it's, it's not major, but there is a minor impact, or there could be a minor impact. I mean, with, you know, this would be with a client other than Saudi Aramco. Yes. Yes. Not Saudi Aramco. Very limited, yeah. Yeah. Thank you. Yeah. Thank you, Naif. The last questions are from Dana. Please, Dana, you're unmuted. Thank you, Kapitan. Two questions on the unconventional starting in next year. What does the ramp-up look like, especially that you've just highlighted the overruns? It's a big contract, amazing job in winning. What should we expect on the margins down next year? That's the first part. Secondly, since I'm the last one, I'm gonna ask all at once. On the international front, I'm not sure if you have already talked about it, the IPO guidance of the 10 rigs internationally. What is the update, if there is any change in the strategy? Thank you so much. Let her cover it. So let me take the, the second question first, then I'll pass it to Hubert for the margins. If you. You're right. If you go back to the pre-IPO guidance, what we said is we would have four rigs offshore. We would have 10, you know, 10 rigs, you know, expansion out of the kingdom, and we might have a plan of growth on land from five to 10 rigs. What did we achieve today? Today, we achieved a 10 rig, 10 rigs, which is instead of the expansion out, is in Saudi. During the IPO, we said they will be unconventional, but we didn't, we didn't forecast because we didn't know when it's gonna come. The unconventional came faster, and when we, when we look at the, the expansion out of the kingdom and the unconventional, we can realize that the unconventional was more accretive. We decided to win the unconventional for two things: one, it's a better deal. Number two, it is, it's very strategic, it's good for the kingdom, and it's, it's, it's sustainable. It's not gonna, it's here to last for a long time. If you look at any contract outside Saudi, might not have the same length of operational time like the one in unconventional. The unconventional is gonna go for years and years and years. It's better. We decided that we will take this. what we, what we did is we exchanged the 10 rigs into going out of Saudi with the unconventional, which is a better deal that we see. what additional, too, we, we won an extra offshore rig. instead of four, we won five. there is one additional offshore rig. This additional offshore rigs is almost four land rigs. if in all scheme of things, we almost delivered the five-year plan in one year. I guess there was a question on the margin. I think we have already answered that in the sense that we have indicated that, you know, from a cost standpoint, we have modeled the operating cost to be the same as the land rigs, simply because we don't know. We cannot, at this point in time, we cannot quantify the upside, the potential upside that we're gonna get from energy of scale, from the synergies. It's a bit too early. That's one thing. I think on the day rate, we have already answered. I mean, we have said that the day rate will be in the. Low four. -in, in the low, low, low, low 40s, and it's. We have confirmed that it's, you know, it's slightly accretive compared to the, to the, to the average of the land segment. I think you have all the- Yeah. I think you have all the elements. Did we cover your questions, or you want us to repeat? Can you talk, Dana? Dana? Yes. Yes, I can now. Yes, on the ramp-up, all of the 10 rigs will start all at once, or is it gonna be a gradual? No, I mean, arrival gradual, but I think, I think, I mean, we're, we're, we're seeing that the revenue will start in H2. Yes. Okay. Arriving of the rig doesn't mean that you generate revenue. Yeah. You're not gonna get all of the 10 at once? Yeah. I mean- Yeah. I mean, yeah, there's gonna be. Yeah, it's they're gonna arrive at once, but, you know, there's gonna be a phase you have to go through in the client's acceptance process. I mean, there is, there is, there is a, there is a process that needs to, that needs to kick in. What we're saying, we're saying, you know, we see, we see the revenue flowing into H2. Okay. Thank you. Thanks a lot, Dana. Thank you, all. Thanks a lot, Arabian Drilling Management, for participating and clarifying and addressing the inquiries. Thank you all for participating, and have a nice day. Bye-bye.