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1. Company Snapshot

1.a. Company Description

Shelf Drilling, Ltd., together with its subsidiaries, operates as a shallow water offshore drilling contractor in the Middle East, North Africa, the Mediterranean, Southeast Asia, India, and West Africa.The company offers equipment and services for the drilling, completion, maintenance, and decommissioning of oil and natural gas wells.It serves government owned or controlled energy companies, and publicly listed global integrated oil companies or independent exploration and production companies.


As of December 31, 2021, it owned 30 independent-leg cantilever jack-up rigs.Shelf Drilling, Ltd.was incorporated in 2012 and is headquartered in Dubai, the United Arab Emirates.

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1.b. Last Insights on SHLF

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1.c. Company Highlights

2. Shelf Drilling Delivers Resilient Q1 2025 Performance Amidst Market Volatility

Shelf Drilling reported a robust first quarter for 2025, with adjusted revenue of $243 million, an 8% sequential increase, driven by new contract commencements. The company maintained strong profitability, with adjusted EBITDA of $96 million, representing a healthy 40% margin. Net income stood at $14 million, while cash reserves increased to $207 million, up $55 million from the end of 2024, supported by robust EBITDA generation and reduced capital expenditures. The company also amended its term loan, extending the maturity to March 31, 2027, and reported total liquidity of $332 million, underscoring its financial stability. However, the actual EPS of '-0.03' fell short of the estimated '-0.01', reflecting slight pressure on net income despite strong top-line growth.

Publication Date: May -13

📋 Highlights
  • Strong Safety Performance: Total recordable incident rate of 0.24 and 99.4% fleet-wide uptime.
  • Operational Highlights: Completed two rig relocations to West Africa and sold the Main Pass I, with plans to divest one to three additional non-drilling units.
  • Contract Extensions and Backlog: Secured extensions in Nigeria, Egypt, and Saudi Arabia, with a backlog of $1.6 billion and 29 of 33 rigs contracted at an average day rate of $100,000.
  • Financial Performance: Adjusted revenue of $243 million, up 8% sequentially, with adjusted EBITDA of $96 million (40% margin) and net income of $14 million.
  • Market Outlook and Liquidity: Total liquidity of $332 million, supported by strong EBITDA and reduced CapEx, with confidence in navigating near-term challenges and capitalizing on long-term growth.

Operational Excellence and Strategic Initiatives

Shelf Drilling demonstrated operational excellence with a total recordable incident rate of 0.24 and 99.4% fleet-wide uptime, highlighting its commitment to safety and reliability. The company completed two rig relocations to West Africa and sold the Main Pass I, with plans to divest one to three additional non-drilling units in 2025. Contract extensions in Nigeria, Egypt, and Saudi Arabia, along with active discussions for further extensions in key markets, underscored the company's ability to secure stable revenues. The backlog stood at $1.6 billion as of March 31, with 29 of 33 rigs contracted at an average day rate of $100,000.

Market Outlook and Long-Term Fundamentals

Despite near-term volatility, the market remains resilient, with Brent crude averaging $75 in Q1 and global oil demand growth forecasts intact. Jack-up utilization remains healthy, with supply and demand balancing as rigs relocate from the Middle East. While day rate pressures persist, long-term fundamentals are stable, supported by major operators' disciplined investments and shallow water demand. As noted by management, "we remain confident in our ability to navigate near-term challenges and capitalize on long-term market growth," reflecting optimism about the company's strategic positioning.

Valuation and Financial Position

Shelf Drilling's current valuation reflects a P/E ratio of 1.67 and a P/B ratio of 0.29, indicating a moderate valuation relative to earnings and book value. The EV/EBITDA ratio of 4.27 suggests that the market is pricing in expectations of stable cash flows and growth. However, the negative free cash flow yield of -15.55% highlights the company's ongoing investments in operations and asset management. With a ROIC of 8.08% and ROE of 19.75%, Shelf Drilling demonstrates efficient use of capital, despite the challenging market environment.

3. NewsRoom

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ADES finalises acquisition of Shelf Drilling

Nov -27

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Shelf Drilling shareholders back cash merger with ADES

Oct -08

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ADES Holding increases cash offer in Shelf Drilling merger

Sep -17

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.12%)

6. Segments

Contract Services

Expected Growth: 4%

Shelf Drilling, Ltd.'s 4% growth in Contract Services is driven by increasing demand for offshore drilling services, rising oil prices, and growing investments in exploration and production activities. Additionally, the company's strategic expansion into new markets, improved operational efficiency, and strong relationships with major oil and gas companies contribute to its growth momentum.

Other

Expected Growth: 6%

Shelf Drilling's 6% growth is driven by increasing demand for offshore drilling services, particularly in the Middle East and Southeast Asia. Rising oil prices and growing E&P investments also contribute to growth. Additionally, the company's strategic acquisitions and expansion into new markets, such as the Gulf of Mexico, further support its growth momentum.

7. Detailed Products

Jackup Rigs

Shelf Drilling's jackup rigs are designed for drilling and workover operations in shallow waters, providing a stable and efficient platform for oil and gas exploration and production.

Drillships

Shelf Drilling's drillships are designed for deepwater drilling operations, providing a mobile and flexible platform for oil and gas exploration and production.

Semi-Submersibles

Shelf Drilling's semi-submersibles are designed for drilling and production operations in harsh environments, providing a stable and efficient platform for oil and gas exploration and production.

Well Intervention Services

Shelf Drilling's well intervention services provide a range of solutions for optimizing well performance, including coiled tubing, wireline, and pumping services.

Project Management Services

Shelf Drilling's project management services provide a comprehensive range of solutions for managing drilling and production projects, from planning to execution.

8. Shelf Drilling, Ltd.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Shelf Drilling, Ltd. is medium due to the availability of alternative drilling services and equipment providers in the market.

Bargaining Power Of Customers

The bargaining power of customers is low due to the specialized nature of Shelf Drilling's services, which limits the ability of customers to negotiate prices.

Bargaining Power Of Suppliers

The bargaining power of suppliers is medium due to the presence of multiple suppliers of drilling equipment and services, which gives Shelf Drilling some negotiating power.

Threat Of New Entrants

The threat of new entrants is low due to the high capital requirements and regulatory barriers to entry in the offshore drilling industry.

Intensity Of Rivalry

The intensity of rivalry is high due to the competitive nature of the offshore drilling industry, with multiple players competing for a limited number of contracts.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 80.11%
Debt Cost 3.95%
Equity Weight 19.89%
Equity Cost 14.62%
WACC 6.07%
Leverage 402.77%

11. Quality Control: Shelf Drilling, Ltd. passed 0 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Odfjell Drilling

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Value: 4.7

Growth: 3.3

Quality: 6.5

Yield: 5.6

Momentum: 9.0

Volatility: 6.0

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Borr Drilling

A-Score: 4.4/10

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Growth: 8.2

Quality: 4.6

Yield: 2.0

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Growth: 3.3

Quality: 7.5

Yield: 0.6

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Volatility: 1.0

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SMA Solar Technology

A-Score: 3.8/10

Value: 7.8

Growth: 2.8

Quality: 2.5

Yield: 1.9

Momentum: 8.0

Volatility: 0.0

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Shelf Drilling

A-Score: 3.8/10

Value: 8.2

Growth: 4.9

Quality: 5.5

Yield: 0.0

Momentum: 4.0

Volatility: 0.0

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Tullow Oil

A-Score: 3.1/10

Value: 10.0

Growth: 3.6

Quality: 4.9

Yield: 0.0

Momentum: 0.0

Volatility: 0.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

18.44$

Current Price

18.44$

Potential

-0.00%

Expected Cash-Flows