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Kuwait-based drilling and oilfield services contractor Action Energy Company (AEC) said its operations remain safe and assets unaffected despite ongoing regional geopolitical tensions, while highlighting concentration risk due to heavy reliance on Kuwait Oil Company (KOC).
The Boursa Kuwait-listed company said the majority of its contracted backlog is derived from KOC, meaning any slowdown in upstream spending, procurement cycles or tender activity in Kuwait could directly affect revenue visibility, contract renewals and backlog conversion.
On Tuesday, Sheikh Nawaf Saud Nasser Al-Sabah, CEO of Kuwait Petroleum Corporation (KPC), the parent company of KOC, told CERAWeek energy conference that the corporation was forced to curtail crude oil production after the ongoing war disrupted crude oil shipments through the Strait of Hormuz.
AEC said KOC contracts accounted for about 94 percent of its total backlog of around 321 million Kuwaiti dinars ($1.05 million) at the end of 2025, according to its 2025 earnings presentation.
However, the company noted that multi-year fixed-rate contracts with extension options and termination protections provide revenue stability despite regional uncertainty.
“Significant KWD-denominated backlog with long contract tenure provides cash-flow visibility and strengthens downside protection,” the company said.
The contracts have an average duration of about 5.3 years and a weighted average residual life of around five years, while billing in Kuwaiti dinars limits foreign-exchange exposure.
Drilling services account for about 72 percent of the backlog, with oilfield services contributing the remaining 28 percent.
Action Energy added that backlog levels are equivalent to about 6.9 times net debt, supporting its capacity to meet financing obligations, with several contracts including renewal options and some already re-tendered.
The company said about 47.6 percent of the backlog relates to existing signed contracts, with the remainder linked to projects under mobilisation.
In the first quarter of 2026, subsidiary Sun Drilling Kuwait Company was awarded a KOC contract worth about KWD 62.14 million for the supply of five land rigs for drilling and workover operations over a five-year period.
Supply chain and workforce risks
The company warned that regional instability could create supply chain and labour challenges as its operations depend on globally sourced equipment including rig components, electrical submersible pump parts and inspection tools, and a large multinational technical workforce.
Longer import lead times, higher spare-parts costs and logistical disruptions could affect operations while impediments to expatriate labour flows could increase hiring and retention costs for rig operations and service delivery.
Domestic focus supports resilience
The company presentation noted that exposure to cross-border disruption remains limited because all rigs, personnel, supply bases and customer contracts are located within Kuwait.
AEC also cited its relatively young drilling fleet, with an average age of just over two years, utilisation above 99 percent and non-productive time below one percent, as supporting operational continuity.
Predictive maintenance systems and in-house repair, inspection and rig-move capabilities further reduce dependence on external suppliers, the company said.
AEC operates 20 onshore rigs in 2025, representing about 10 percent of Kuwait’s active rig fleet. The company reported a 53 percent year-on-year increase in revenue to KWD 31.9 million, with EBITDA of KWD 16.4 million.
(Writing by Anoop Menon; Editing by SA Kader)
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