The Company reported a 102.74 per cent increase in its profi t after
tax from H1,938.73 million in 2012- 13 to H3,930.65 million in 2013-14.
Correspondingly, the Company''s cash profi t (profi t after tax plus
depreciation) strengthened from H6,967.20 million to H9,246.90 million
during the period.
At Aban, this improvement was the result of some decisive initiatives
in improving its deployment, operational and fi nancial performance.
One, the Company successfully deployed almost all its rigs on contract,
resulting in a high asset utilisation. Add to this the fact that the
Aban Ice commenced on a new contract during the year under review at an
enhanced day rate. As most of the contracts are in USD, the
depreciation of the Indian rupee against USD during the year resulted
in higher revenues in Indian rupee and a correspondingly higher profi
Tw o , the Company refi nanced its debt for a longer tenure of 15
years, which aligned debt tenures with the long- term nature of the
Company''s assets and reduced considerable stress on the Company''s
repayment capability and projected cash fl ows.
Three, the Company sustained prevailing rates for long-term contracts
and capitalised on higher rates where rig contracts were renewed.
Four, even as the external currency environment remained volatile, the
Company converted all its loans into dollar denomination, progressively
emerging as a currency-neutral corporate with revenues also in dollar
This was a significant step in the area of risk management.
At Aban, we had foreseen this positive development for various reasons.
Rig rates had declined following the 2008 fi nancial crisis and were
poised for correction. During the year under review, the Company
graduated from legacy to contemporary rates, moved a rig from Iran to
other regions with long-term potential, deployed one more rig in Mexico
and reinforced its global positioning, with 80 per cent of its revenues
derived from international waters as opposed to a decade ago when the
reverse scenario prevailed.
Rigs Aban III and Aban VI had incident- free operations for a
continuous period of six and seven years respectively.
At Aban, we are optimistic of our prospects for a number of pertinent
The high oil realisations have translated into attractive earnings for
a number of oil majors, which they have prudently deployed into fresh
oil & gas exploration. One of the interesting developments is that some
new global exploration frontiers have emerged, widening the market for
drilling and rig deployment. East Africa is one such E&P destination
where there has been an increase in the demand for oil rigs accompanied
by attractive contract tenures and realisations.
The global rig market is not just marked by an increased demand for new
rigs; it is also marked by a significantly higher demand for new rigs
with correspondingly higher realisations. At Aban, we are attractively
placed to capitalise on this market divergence on account of an
ownership of nine new rigs enjoying a high uptime, low costs,
attractive realisations and a relatively young fl eet. The Company
continues to lay an emphasis on safety. The Company intends to
strengthen its Balance Sheet by refi nancing debt for a longer tenure
resulting in a comfortable interest cover.
Over the foreseeable future, the Company expects to report an increase
in earnings which are not driven as much out of an increase in day
rates but by a decline in interest outfl ow, strengthening the
Company''s ability to ride through various market cycles and reinforce
its long-term sustainability.