Abraj Energy Services SAOG ($ABRJ)

[Foreign Language] So good afternoon, ladies and gentlemen, and welcome to Abraj's Earnings Call for the First Quarter of 2026. Thanks to Muscat Stock Exchange for hosting today's call. Last week, we published our audited financial results for the quarter. These are available on MSX portal as well as on our Abraj Investor Relations portal website. The presentation during today's call will also be published to the MSX portal and Investor Relations portal shortly after the session. As usual, I would like to draw your attention to the disclaimer statement, which I invite you to at your [indiscernible] Joining me on the call today are Abraj Chief Operating Officer. Mr. Zahran Al Kindi, who is attending our CEOs engineers Saif Al Hamhami, who is on a business trip and able to attend today. Also presenting our Chief Finance Officer, Mr. Hubert Lafeuille and our Chief People Officer, Mr. Hilal Siyabi, who will be available to assist during the Q&A session. The agenda for this session will cover financial and operational highlights for the first quarter of this year, backlogs and market share updates, utilization rates, financial performance. Our closing remarks will include an update on the strategy, excluding -- execution and guidelines -- guidance. We will then open the floor for the Q&A session. With that, I'll hand over to our CEO, Mr. Zahran Al Kindi.

[Foreign Language] Let me start by highlighting Abraj financial performance for the first quarter this year. We began the year very strong, putting with recent revenue and improved margins. For the quarter, we recorded a revenue of OMR 36 million represents 6% decline quarter-on-quarter. The decline mainly reflects [indiscernible], some impact from the Kuwait operation [indiscernible] we they been stacked under the stacking rate due to the situation in Kuwait since 6th of March. And planned maintenance on [indiscernible] despite this, our profitability improved, we delivered an EBITDA margin of 33%, which is 1.6% higher than the previous quarter. This improvement reflected a reflection of disciplined cost control and strong operational efficiency. Profit after tax increased by 20% quarter-on-quarter, reaching around OMR 4.5 million compared to OMR 3.7 million last quarter. This resulted in earnings per share of OMR 5.79 per period. From a cash perspective, we remain strong, operating cash flow amounting of OMR 12.1 million representing close to full cash conversion from EBITDA. During the quarter, we invested approximately OMR 10 million on CapEx, mainly related to the [indiscernible] as part of our growth strategy. I will leave our CFO, Robert to cover the financial in more details later on. For now I would like to give some high operational highlights. [indiscernible] our operation in terms of regularization, we achieved almost 90% reutilization. It's improved compared to last year. As a reminder to everyone, our average utilization last year was around 85%. It's also good to highlight at the end of the quarter, we had 3 inactive rigs. One of those rigs commenced operations last week. Another rig expected to start shortly and the third one has mobilized and it is expected to start within a couple of weeks. Based on this progress by end of Q3, somewhere, we will have 100% utilization on the rigs. Another highlight, in terms of client and customer satisfaction, we achieved around 91%, reflecting a strong grind confidence on our service quality. In terms of NPT, non productive time, we staying very belwo industry benchmark, around 1%. Another highlight [indiscernible]. We continue outperforming our rig move. During this quarter, we successfully executed through the operational excellence, we set a total of almost 900 hours. That is the target. That results into OMR 400,000 additional revenue from the rig move. On health and safety, we continue to see improvement in our last time incident frequency. We also obtained the certification of ISO45001. Our backlog continued strength following the record backlog of OMR 880 million reported last quarter. We achieved a new all-time high of almost OMR 900 million by the end of Q1. Over the last 4 quarters, backlog has increased nearly 20%. During the quarter, we consumed approximately OMR 36 million, as you can see it in the bottom below left graph of backlog through the revenue, this was more than offset by the new contracts awarded, including the extension of our 4 Wave 2 rigs with B for 6 years each, contributing around OMR 124 million and a cement surface award from OQEB adding around OMR 13 million. Subsequently, the first quarter end of announced [indiscernible] contract with an estimated value of OMR 120 million, which will be reflected due to B. As a result, we expected a backlog of almost OMR 1 billion by the end of the second quarter. Turning to the market share. As you can see in the top graph, as of today, on the drilling rigs, we own around 26% market share. We expect our market share to increase slightly, reflecting the deployment of the new build rigs and the reflection on stack rigs which we secured a contract in Q2. In fracturing services, we expect our market share to increase following the latest BDO contract which will increase our scope and will also allow us to attend the high-end and more complex wells. Similarly, on the Cement, we expect our market share to increase following OQEB work. Finally, we are proud to say our utilization continued to trend ARPU. And as I mentioned earlier, we expect to reach utilization by Q3. With that, I will hand Hand it back to Hubert to give on the financial performance in no details.

Thank you, Zahran, and good afternoon to everyone on the call. I will now walk you through key financial performance metrics for the quarter. So the first slide is showing the financial performance with some key metrics. We have revenue, EBITDA, profit after tax and CapEx. And for each 1 of those metrics, you will be a comparison and quarter-on-quarter comparison, which will be this current quarter, Q1 with the prior quarter Q4 2025. So starting with the revenue on the top left graph, year-on-year performance shows another minus 2% decline, primarily due to lower rig move and fracturing activity, partially offset by additional active rig months. Quarter-on-quarter, as Zahran mentioned, revenue declined by 6%, also due to fewer rig moves, the impact on Kuwait rigs and schedule maintenance and upgrade on one of the rigs that happened during the quarter. We will cover these in more detail in the upcoming bridging slides. Moving to EBITDA on the top corner. We have a year-on-year reduction of 4%, which is broadly in line with the revenue trends. However, quarter-on-quarter EBITDA declined by only 1% compared with a 6% decline on the top line, which is reflecting improved margin driven mainly by cost efficiencies. Profit after tax declined slightly year-on-year due to the timing difference in maintenance activities. And again, on a quarter-on-quarter basis, however, the profit increased by from 20% from OMR 3.7 million to OMR 4.5 million, driven by higher rig activity, cost efficiencies and also the absence of an impairment charge that we recognized in Q4 of 2025. Again, we will cover these in more detail in the upcoming bridging. Capital expenditure now, which is the top -- the bottom right corner. For the quarter, we spent OMR 10.6 million, which is largely allocated to new build rigs. We have 8 new build rigs under construction, for which -- of which 7 are with PDO. We have 6 with the Wave 3 and then we have a 7-1. And then the last new rig build is with Jack Wafra joint operation in Kuwait. Of the 8 weeks that are under construction, 5 represent net growth to the fleet; and three, suppose will replace rigs that are scheduled for retirement in the near future. Turning now to performance by segment. As you know, we have 2 segments. We have drilling and workover and well services and others. So in the Drilling and workover segment, financial performance is highly sensitive to the number and the distance of the rig move. So year-on-year revenue remained broadly stable, while profit declined due to reduced rig move activity. Q-on-Q line from OMR 33.1 million to OMR 31.6 million, reflecting change in rig move activity, notably due to the condition in the last week of March. We had also maintenance downtime where we had 1 rig that was -- that went for almost 60 days in plan out of service time and also Kuwait related impacts, which I will cover in more detail. Despite this, margins improved due to the higher rig activity and the absence of nonrecurring impairment charges. The other segments, the well Services and others include fracturing, cementing and revenue from our Infintech training center. These businesses operate largely on a core basis, I mean the fracking and the cementing, making the financial performance of that segment, highly dependent to the job execution volume. Revenue declined quarter-on-quarter due to 1 sizable frac job in Q4 that did not repeat in Q1. Encouragingly, profit margin improved year-on-year and quarter-on-quarter, supported by stronger cost control, particularly in equipment high, logistics, fuel and chemicals. Let me now -- let me now walk you through the bridge analysis for the fourth quarter to the first quarter, starting with revenue. So starting with the revenue, as we said, we saw a quarter-on-quarter decline of about 6%, moving from OMR 38.4 million to OMR 36 million. The majority of this reduction was driven by lower rig move activity, largely due to adverse weather condition in late March that has temporarily stopped all rig move across the country. In addition, as I mentioned, 1 rig was taken out of service for plan inspection recertification and upgrade, which also reduced the revenue. We also explained some of our rigs in Kuwait. As Zahran just mentioned, we have 2 rigs in Kuwait that are currently on a standby day rates. And we have some of the adjacent revenues such as the recharge and the capturing are also reduced accordingly. There were a few smaller positive and negative items during the quarter. But overall, this broadly offset each other. So again, revenue volumes, largely explained by lower rig move activity, 1 rig on the planned maintenance and then a little bit of Kuwait related impact due to geopolitical situation. Moving on to the -- moving on to the profit after tax bridging. The same operational factors combined drove to a combined downside of approximately OMR 1.1 million, which is basically the addition of the red bars. Again, this is coming from the rig move activity, the maintenance downtime that we had on another rig and the impact of Kuwait. And this downside was partially offset by higher rig activity, including 1 rig that commenced a new contract during the quarter as well as continued cost structure. In addition, we saw also better cost management in our frac service business, particularly in product and logistics, which delivered a modest but positive contribution to the bottom line. Overall, these factors explain the quarter-on-quarter movement in profit after tax. Now finally, turning to cash or operating cash position at the start of the quarter was OMR 7.1 million, and we closed the quarter with OMR 6.6 million, representing a 7% decrease Q-on-Q. The key operating drivers were the profit after tax and the noncash items such as depreciation, amortization, asset impairments, which were added back to the cash. On the investing side, as we mentioned, we had a CapEx of OMR 10.6 million, mainly related to the new build CapEx program. To fund this, we drew OMR 19 million of additional debt during the quarter from 3 commercial banks. At the same time, we repaid OMR 4.9 million of loans plus lease liability. And we also paid OMR 1.5 million in interest and bank charge. So for information, our weighted average cost of debt is around 5.5%. So in March, we all million of dividend, which is equivalent to [ OMR 16.88 baisa ] per share, representing approximately 74% of our 2025 net profits. Finally, the remaining movements relates to income tax and other net items which are mainly timing difference between accounting recognition and cash settlements. Now let me turn on to cash, net debt and leverage. So at the end of March, our net debt was OMR 110 million, comprising of OMR 103 million of long-term debt, a fully drawn OMR 10 million revolving facility million of lease liability net of OMR 6.5 million of cash. The net debt-to-EBITDA leverage ratio increased to 2.3% in Q1 from 19.% in Q4 reflecting the ramp-up of our CapEx cycle, and we expect the leverage to continue increasing as we deploy additional debt funded capital to support CapEx driven growth. Despite this increase, leverage remained moderate and still provides continued headroom to support future growth opportunity. The bottom charts illustrate the net debt bridge from Q1 -- from Q4 to Q1. So net OMR 95 million in Q4 to OMR 110 million in Q1, driven by OMR 14 million of net additional long-term debt, which was again OMR 19 million of new drill down partially offset by OMR 4.7 million of principal repayments. The short-term debt remains unchanged, while lease liabilities increased modestly and then the cash declined by OMR 0.5 million which is basically reflecting OMR 12.5 million of free cash flow to equity, offset by OMR 30 million in dividend payments. The next slide, this will now conclude the financial update. Before I hand it back to Zahran for his update on strategy exclusion. Let me just go things on the guidance. So in the last quarter, we gave a guidance of revenue of OMR 145 million to OMR 155 million. This guidance remains unchanged. The update that we are giving is in Q2 2026 for the second quarter. In the top line, we see a slight upside of between 0% to 5%. This is Q1 due to improved rig equities. Our guidance on EBITDA remain a change from low to mid-30 percentage points. And the guidance on the CapEx remained unchanged from OMR 70 million to OMR 90 million, which is basically the ramp-up of the CapEx program. With that, I will hand it over back to Zahran for his closing remarks and update on strategy execution.

To conclude, in the drilling and workover, we remain firmly focused on delivering the 8 newbuild rigs for [indiscernible]. With this, we will reach it in decades 100% utilization for all our fleet and will have no stack rates. In the world surfaces, we are pleased with [indiscernible]. This is one of the contract that we were waiting for, for a long, long time. This will allow us to get into more complex high-end operations. In terms of international growth, we continue the discussion with [indiscernible] With that, we conclude our presentation and we are ready for early Q&A. [Foreign Language]

[Operator Instructions]

Can you hear me?

We can hear you.

I was wondering the guidance on revenue, does it include it was unchanged -- I guess, does it include the latest contract that you won, which is around OMR 24 million per year starting Q2, I think, or Q3?

Yes, I'll take the question. Thank you for the question. So the thing is that, I mean, so we just signed the contract, and those contracts are on core basis, right? So we don't really know the volume or the timing of when the contract will be executed. So we don't -- we haven't included because we think it's a bit too early to see what's going to be the contribution. We also have a little bit of upgrade to be made on the second frac fleet, which includes different type of equipment. You have the pump, you have the sand management system, you have the coil tubing, et cetera. So we believe that the contribution on that particular contract will only kick in by the end of the year. So at this point in time, we have decided to leave it unchanged, but we might revise it at the end of Q2.

Okay. Okay. And on that contract, do you require any leverage for this specific contract? And what is the margin expectation on this contract?

So we can't really comment specifically on the margin of the contract. But what I will say is that overall, we think it's going to be accretive to the business because some of the equipment is already here and all it's going to do is basically it's going to improve the utilization of existing assets. Some assets we'll have to acquire. Other assets are already existing and any improvements of those assets, any improved utilization will definitely be accretive to the business.

I would like to highlight one thing. The business is a business. So we -- as Robert mentioned, we do have majority of the equipment with us and the utilization rate with this contract is going to improve. So all in all, definitely we're going to see an improvement [indiscernible]

[indiscernible] go ahead.

I have just a question. One is that you mentioned that you're targeting 100% utilization by third quarter. Yet when I look at the revenue guidance, it remains between OMR 140 million to OMR 150 million, which is almost the same as when the utilization was in the mid-80s. So does that imply the day rates on the new contracts are lower? Or are you building a significant buffer for a potential downturn?

No, I don't think the day rates are not necessarily low. It's just the -- we just -- I mean, the revenue guidance is just reflecting the timing of when we believe the rigs are going to be contributing. -- for instance, on the newbuild delivery, which is the PDO Wave 3 rigs. So we have 6 rigs to deliver. And the first 2 rigs are expected to come sometime in Q3 -- end of Q3, early Q4. So they will be -- we will only have a partial contribution in 2026. So it's not about the day rate. It's just about when we believe that those rigs will come online and when we believe they're going to contribute. So that's the reason. Do you want to add something?

You're absolutely right. The day rate, there's not a significant change on the day rate. It's only the timing when the rigs arrive to and when we will...

I think we still have a lot of moving parts in terms of those deliveries. So maybe we'll wait until Q2 to see how we can -- if and when we revise the revenue guidance -- but no impact on the day rates -- did you have another question?

Yes. One more question regarding the discussions in markets like Algeria and Libya. These markets they carry significantly higher payment than the current geopolitical scenario. Is there any current existing ideal assets and would they require any new CapEx cycle?

We are in a very early stage of discussion. and business cases. We are exploring different options. We are also assessing the situation. We will take all the surrounding our consider. We will not go without assessing the whole situation. So to bring confidence to the investors, it's a high-level discussion at this stage. There will be a full risk assessment into whether we are going with a new machine or we are going with the old machine and what are the confidence on the table that we enter those countries. Algeria, we believe we have very good chance. It's stable there. Libya, we are in very early stage...

Let's move on to [indiscernible]. I think you have a question.

The guidance. Just a couple of questions for me. If you can share, please, some color on the 3 rigs to be retired. Should we expect it to be sold? Or should we expect some recycling there? Then I'll get to the next question. If we can take it one by one.

Option for those rigs. As we are speaking, and this is -- again, this is not sort of a solid commitment. We are already negotiating a contract with a different operator in Oman. They going to come out of PDO [indiscernible].

And can you give us an update on the tendering activity in Oman given that there is limited exposure to the state of Oormo,hould we expect higher production across Oman and hence, stronger tendering activity?

I think that there is no particular change in the production. I think that -- I mean, obviously, the geopolitical situation means that Oman has a good opportunity to try to export and produce more. Saying so, it's a small market. There is only -- I mean, I think there is only like 80 weeks total rig count in the country. So I mean the -- possibility of increasing the spare capacity, I think, are quite limited. But obviously, because we are the largest drilling contractor in the country, we're very well positioned and what Zahran saying is that with respect to those 3 weeks that we expect it to retire. Now we're seeing interest from some of the clients to have those risk continuing. So maybe it's sort [indiscernible] for us to keep the rig working for a couple of years.

In fact that in the last part fix will be an approach different operators for additional rigs, which as we mentioned earlier, by end of Q2, we will be deploying all our stack rigs. So we don't see any decline in the activities. It is going to be only stable, if not increasing a little bit.

Great to hear. My last question on Kuwait. Can you give us an update on the situation of the standby rigs or if there could be further rigs to be on standby?

Yes. So we have -- as we are speaking, we have 3 rigs in Kuwait. 2 are in operation since last year. And since fifth of March, they've been stat on a 90% of the day rate. And we were hoping the station will get better, and we go back to operation. However, in digital date, the client is requesting to keep them on a standby under payment until further notice. The [indiscernible] is under commissioning, and we expect [indiscernible] to finish the commissioning by end of this week, beginning of next week. And for that, we also seeing the clients already initiated the discussion to keep the rig under standby with payment.

I can just add just to be sure, so the standby that we have on the 2 rigs working in Kuwait, it's 90% of the day, right? So it's not a huge shortfall compared to the day, right? The only thing is that you have also the -- there is a little bit of revenue loss on the associated revenue, which is regular trans, et cetera. So all that creates a little bit of an impact, but it's not that material. It's only 2 rigs and it's only 90% of the rigs.

[indiscernible] you can hear us. You can go ahead with your question. We can move to good [indiscernible].

Can you hear me?

Yes, we can hear you.

Just a few follow-up questions. First one on the previous question of your Kuwait operations. What are the reasons for keeping these rigs in stacked condition? Is it because of the current volatile geopolitical situation or any other reasons?

For that reason, yes. So we restate ores are stacked with grow the machine the machine operated there minimum to keep the rigs warm so we can reactivate the machine at any wont of time. But we've been inspected by the standby until further notice. And as Hubert and I mentioned earlier and the 90% of the TRA.

So did your operations in any way of the rigs were affected during the last 2 months because of the situation, no? In Kuwait?

No, Besides, they are stacked, there is not any -- any harm to the equipment or any harm to the people.

I mean, so it's only for Kuwait, and it's only for 2 rigs. I mean as far as Oman is concerned, base of the operation, there is absolutely no change because of what happened in the last 2 months in the Gulf.

Right. Got it. And you mentioned that you're planning for deployment of could you please give us a possible time line for this?

And see this the 6 rigs with BDO, the Wave 3 three of them, they will come to the country by end of Q3, beginning of Q4. Hopefully, we don't see any impact on delivery as of today. The rest, the two of them will come Q2 '27. And the last 1 for BDO will come beginning of Q8 -- '28. One of the additional bricks will come by January next year. So those are the 7 rigs with BDO. The eighth rig is what I just mentioned. So already Kuwait, it's under commissioning, and it should start the operation. Hopefully, if everything goes well by beginning of next week, otherwise, they would also had stack it. So all of them, they will be deployed between Q3, Q4 this year, and the last one will be beginning of Q1 2028.

All right. Got it. And my last question is on your schedule remainder of the year. Could you please give us some color around what are the set maintenance activities? And also just wanted to check if there is any major [indiscernible] for maintenance factor which is coming up?

It is actually CAC for maintenance. This is a 2,000-horsepower rig. It's a big machine. It's been operating for [indiscernible] over the last 10 years. and it is due for cash flow. So we took the machine out of the surface and we then afford [indiscernible]. We finish it on in 60 days. That's the role that we were planning for and we finish it with it in that window.

So there's only one for [indiscernible] when are we planning to do that?

Those are 3 rigs. One was done last year. One was done at the beginning of Q1. And 1 is ongoing as of today, we'll finish within 3 weeks.

Got it. And there are no other maintenance activities for the second half of the year?

Second half year, we don't have anything for [indiscernible]. We will go the chatbox.

I think I'll read that at some of the questions that we didn't cover during the Q&A session. So the question is the notice mentioned in the third way is expected to commence drilling in Q2 2026. And is a final stage of client acceptance. Has this risk formally been accepted? And what is the time frame for contract value tuner with [indiscernible] joint operations.

The rig not yet accepted, it's the [indiscernible] test as we are speaking, and it should be accepted within a couple of days, post by beginning of next week. The plan we already initiated a discussion with the customer. They wanted to hop stack it or a certain rate until the situation more safe for them to go back to operation.

Okay. Then again, with a similar question. You mentioned 3 stack rigs by the H1 2026. Does that include the quick rigs. Could you also clarify when did the Rig 306, the 1 would contract by the end of 2025, get any contract, which contracted includes this rig.

So yes, so we said 3 inactive rigs out of the inactive rigs by the end of Q1. One of those rigs is done, but we're -- we are starting in Kuwait right now. So this is the one that Zahran mentioned, that we expect to start any time soon. Out of the 2 other rigs, 1 actually started last week with PDO. So that rig is now working. And the third rig out of the 3 is week 36, which was mentioned, which is going to be used as a gap filler. And we expect -- so this rig is being mobilized -- and we expect this rig to start drilling -- to start operating operation 6 to 8 weeks from now. So we expect that this rig will be in Q3. This is why Zahran mentioned earlier in the call that by the time we get to Q3, we expect that we're going to have a full utilization on it. I hope I answered, yes.

So we'll move to the next question. The company is nearing the peak of the CapEx cycle. What is the expected 2026 and 2027 CapEx?

Yes. So as we mentioned, I mean, both 2026 and 2027 are heavily loaded in terms of CapEx because of the growth plan. As I said in the guidance, we said OMR 70 million to OMR 90 million for the year, which is quite significant. In 2027, as Zahran mentioned, we still have [indiscernible] we still have to deliver a couple of rigs. So 2027 will be loaded in CapEx, but not as much as '26. So we see the peak in '26. We see the peak, particularly in H2 of 2026. But yes, 2026 and 2027 are the 2 big years in terms of CapEx because of the delivery of the 8 new rigs.

So 1 more question. Current average day rate for the onshore and workover drilling, do you expect this rate to raise next year?

[indiscernible] increase next year. We can forecast that. The average day rate was very big because of the size of the rigs, the CapEx of each rig. So it's somewhere between 23,000 to 28,000 tonnes per day.

I think Mr. [indiscernible] having some problem with the system. So he wrote his question. Could you break the OMR 70 million, OMR 90 million CapEx between newer rigs and maintenance, new deployments. The PTO contract, is it a new or a replacement of an existing contract that is expiring.

So on the CapEx, I mean, 80% of the guidance that we gave relates to new rigs and roughly 20% is just sustaining CapEx, which is the usual recertification on new well control equipment and other critical equipment that you have to do. The PDO contracts. So when you make a contract, I'm not sure whether you mentioned the PDO contract that we announced in Q1 or the one for the frac, I assume that because it's related to rig it's related to the 1 that we announced in Q1. So the PDO contract that we announced in Q1, we announced extension or new contract award for 4 rigs with a 6-year each rig and this is the continuation of -- it's a continuation of what we call the Wave 2, which is with that we're working for PDO. So it's just existing assets working for and PDO has extended with new 6-year firm term contracts for 4 of those rigs.

Some more questions from [indiscernible]. Could you please explain the difference between rig news and rig activity.

No, this is very important. So when we are drilling, we are on day rates, right? So we receive a day rate for every 24 hours that we're drilling. When we are moving the rigs from location A to location B, we are on lump sum, which is a completely different business model, which means that it is just to be extremely efficient on how quickly we can move how quickly and safely we can move the rig from location A to location B. And as Zahran has mentioned, 1 of the key enablers for us and one of the things that we're very good at is moving the rigs because we always beat the target in terms of moving the rig. So the quicker you move the rig for A to B, you get the same lump sum amount, but then you back from the day rates quicker, right? So that generates additional revenue. On the other side, if you take 10 days or 2 weeks to move the rigs, you're going to get paid the same amount as if you take only 3 days, right? So this is why we insist on the efficiency of the rig because this is a key enabler for us.

We'll go back to Mr. Ravi. I'm sorry, you can go ahead with the question.

Thank you, for taking the chat questions. Just had one follow-up on the 3 stacked rigs in Kuwait. So these rigs are currently at 90% day rates, the 3 of them.

[indiscernible] At 90% day rate. Those 2 have been in operation for the last 1.5 years. The third one is rig under commissioning means it's under client acceptance. We are in a very final stage and it is not on the day rate at this stage. So once they accept it within the next week, hopefully, we will convert it into a standby rate. That's discussion already initiated with the customer.

Okay. So this and standby rate, it is a normal day rate.

Yes. It is basically a normal rate minus, i.e., in this [indiscernible] contract, the 90% of that day rate.

[indiscernible] drilling contract, it's quite customary that you have different type of rate. You have your day rate, full door rates and then you have reduced the rate, maybe you have waiting on weather. You have a weighting on a client, you have [indiscernible] you have different type of rates. So this one is just 90% rate, which is stand out with [indiscernible].

We have one more question from Mr. [indiscernible] on the chat. [indiscernible] filling the gap for the newly built associated with the [indiscernible] contract announced in December?

Yes.

[indiscernible] chat questions. Any more questions from the team on the call.

So I would say [indiscernible] thank you. My understanding is a new rig cost around OMR 10 billion to OMR 11 billion. So 80% is OMR 50 million to OMR 70 million CapEx this year. Does that mean a branch will have 5 to 6 new rigs this year, if there is a replacement what happens to the all the rigs, what are being replaced. Okay.

Okay. I will answer the 6 rigs, 3 of them are replacement rigs to our existing as I mentioned earlier, we already start having discussion and dialogue with different operators in Oman that they would like to have a proposal for those 3 rigs. So we are trying to find a home for [indiscernible]. Those are around 20 years old machine, but they are kept in a very good shape, and they are very marketable. So that discussion is already ongoing.

And with respect to the number of rigs, I mean we can say that between Q1 now 2026 and Q1 2027, yes, there will be 5 to 6 new weeks. There will be 6 weeks delivered. Actually, it's more 6% to 7%, then 5% to 6%, yes.

Minus of payments...

Yes. I mean the thing is that, yes, the timing of the cash outflow on the CapEx is slightly different than the timing of the delivery of the rigs. But the assessment is correct. Between now, in the next 12 months, we will deliver 6 to 7 new rigs, including the one that we are delivering as we speak in Kuwait right now.

One more question. For 2027, how much are you expecting CapEx?

So it will be slightly reduced than 2026. But again, we'll have the tail end of the delivery of the PDO Wave 3. And then we have another rig that we need to deliver in, as Zahran mentioned, in Q1 of 2028. So this one, this CapEx program is still kicking on. So we don't have a range at this point now, but it will be less than what we're spending in 2026. 2026 is the peak year for us in terms of CapEx investments.

Any more questions on the chart or on the call?

Again from [indiscernible]

So the net CapEx is expected to be less than guidance CapEx, assuming the [indiscernible] generate something. Could you please give us a net CapEx this year, if possible?

I'm not sure -- I'm not trying to understand the net CapEx -- so as we said, we said -- so CapEx this year, we estimate between OMR 70 million to OMR 90 million of air, and this is a peak year. I'm not sure if [indiscernible] can specify what exactly is the the net CapEx. I think net CapEx is CapEx less asset disposal. I mean as long as -- okay, so we have 3 rigs that -- as far as -- I've been here only for 3 months, but he will correct me if I'm wrong. But as far as I know, I mean, there were 3 rigs that we intended to retire this year and have been replaced by the PDO with 3 rigs. Because of what that said and because of the geopolitical situation, we are seeing an increased demand from operators for rigs. So there might be a chance that those 3 rigs will actually continue working throughout 2026 as opposed to being retired. So if the question is net CapEx, the guidance CapEx net of the asset divestitures. Maybe we're not going to do asset divestitures, but we'll keep generating revenue and cash with those 3 engines, those 3 rigs, correct?

Correct? Correct. Maybe just to add [indiscernible] these 3 rigs are very well maintained. And we ensure that the mantis up to the level, that's why we do the CAT 4 on time. So they are in good condition and their operational is just some of the customers they prefer to have not more than 20 or 25 years all the rigs. But across out of Oman, some of the rigs are more than 40 years and so they are operating in good conditions more of how we do the maintenance and take care of these assets.

Yes. There is a business case for us to continue to operate those 3 rigs. I mean, as [indiscernible], the 3 rigs are well maintained. There is a business case for us to continue to operate the 3 weeks, we will continue to operate them. So the guidance -- sorry, the guidance on the CapEx is not net CapEx. This is pure spending regardless of whether or not we divest other assets.

Any more questions from the call or from the chat. With that, we will conclude the call. And I would like to thank you all for your time and active participation in the session, and hope to see you soon in the coming call. [Foreign Language]