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Saudi ADES to Boost Brownfields Oil Production in Egypt Upon Deal With EGPC

Riyadh – Al Khobar-headquartered ADES Holding Company has been awarded a service contract agreement with the Egyptian General Petroleum Corporation (EGPC) to operate and enhance production in major oil brownfields in Egypt, namely the SUCO and OSOCO fields.

The award holds a tenor of 10 years which can be renewed for an additional 10-year period, according to a bourse disclosure.

The consortium partnership with a leading local exploration and production player for the award aims to work on achieving incremental production levels that surpass the current baseline production at the two brownfields.

In addition, the involved parties will be reimbursed with most of the operational expenditure (OPEX) incurred during baseline production while being entitled to incremental production returns based on a mutually agreed formula with EGPC.

CEO of ADES Holding, Mohamed Farouk, said: “The consortium project will allow ADES to expand its service offerings available to its clients, paving the way for the potential entry into a new market with a managed risk approach, and while staying true to our strategy of fiscal prudence.”

The Saudi company will be positioned to capitalise on its extensive fleet operational in Egypt while ensuring economies of scale along with maximising efficiency and returns to shareholders.

Farouk added: “This new venture is a continuation of the ADES legacy, rooted in innovation, operational excellence, and a commitment to achieving success beyond our boundaries. We look forward to continuing to meet our clients’ needs, growing our business, and delivering sustainable returns to our shareholders.”

The financial impact of the agreement is expected to reflect on ADES Holding’s earnings by 2025, with an estimated 5% contribution to EBITDA generated from the Saudi firms’ operations in Egypt.

During the first nine months (9M) of 2023, the Tadawul listed company achieved SAR 283 million in net profit after Zakat and tax and its revenues totalled SAR 3.06 billion.

Source : Zawya