Doha: The North Field East (NFE) project remains a significant catalyst for the future growth of Gulf International Services (GIS) in the second half (H2) of the year 2021. The company deployed the remaining three rigs in its GulfDrill JV in the second quarter (Q2) of this year, said QNB Financial Services (QNBFS) report.
GIS stated Java Star, W-Castor and WTucana started working during Q2. The five rigs deployed by GDI will undertake an 80-well drilling program for Qatar’s North Field East project.
The report noted, "Relative to our model, better-than-expected profitability from drilling and aviation served to boost Q2 net income versus our estimate. The overall Q2, 2021 revenue of QR726.7m (-0.1 percent YoY, 3.1 percent QoQ) was in-line with our estimate (1.6 percent variation) of QR715m. The Q2, 2021 drilling revenue of QR242m (4.5 percent YoY, 22 percent QoQ) was 21.4 percent ahead of our estimate of QR199.4m. The beat is due to the remaining three rigs deployed under the GulfDrill JV in Q2, 2021, which we had conservatively modeled to start operating later in second half of 2021."
Gulf International Services (GIS) posted a profit of QR4.8m in Q2, 2021 versus a profit of QR45.3m in Q2, 2020 and a net loss of QR5.5m in Q1, 2021. “Reported earnings for Q2, 2021 beat our forecast of a profit of QR0.6m with out performance due to the aviation and drilling segments. Consistent with their Q1, 2021 commentary, management continued to point to a recovery in the oil & gas sector in Q2, 2021,” QNBFS report said.
With new higher offshore rates going into effect in July, along with all five offshore rigs now being deployed under the GulfDrill JV for the NFE project (remaining 3 rigs started in Q2, 2021), drilling momentum should accelerate in second half of 2021.
“We continue to believe the progress made in costs reduction thus far should dovetail with an expected recovery in market fundamentals as we move forward this year. We expect earnings to surface back into the green for the financial year 2021 as drilling loss declines significantly. Other segments also contribute positively, while continued progress in costs reduction and lower finance charges help boost earnings,” it added.
“We stay longer-term positive on GIS shares but the stock remains in a show-me mode.
"We expect improving financial performance in 2021 and newsflow regarding the NFE expansion/potential debt restructuring to drive stock price performance," it added.
