Gulf International Services (GIS) is in the process of restructuring and refinancing a total $1.3bn debt of its fully owned subsidiary – Gulf Drilling International (GDI) as part of the strategy to reduce the interest burden and drive fast along the growth path.

The restructuring is part of strategies to ensure that the group maintain an optimum sustainable debt and capital level, along with streamlining the overall maturity profile, Mohamed Jaber al-Sulaiti, manager (Privatised Companies Affair), Qatar Petroleum, told shareholders on Sunday at the annual general assembly meeting.

Highlighting that the total debt subject to restructuring and refinancing will amount up to $1.3bn; he said under the new terms, the group would be optimising its finance cost.

"The refinancing exercise will allow the group to re-adjust its maturity profile for sustainable future," he said, adding underpinned by management business plan, this new debt structure would allow for gradual deleveraging of the GIS' financial position.

With the negotiated lower margins and in the current low-interest rate environment, the refinancing would not only assist the group in reducing interest cost, but also provide a more optimum and efficient debt structure with greater flexibility to drive forward its subsidiary’s growth plan and support in tapping any new business opportunities, according to him.

"Going forward in 2020, we are currently assessing the business impacts of the current pandemic situation due to the spread of Covid-19, which would require us to revisit our cost structures, where work has already been started to review operating and capital expenditure," al-Sulaiti said.

The expenditure review is aimed at reducing overall expenditures, and where possible at rationalising costs and enhance cash reserves, which could "positively" affect the overall financial performance of the group, he said, noting that GDI was able to reduce QR35mn in direct costs and another QR23mn savings on general and administrative costs compared to last year.

"The restructuring would help GDI meaningfully save on financial costs due to the soft rate environment," an analyst with a leading investment firm told Gulf Times.

Moreover, the expected higher utilisation rates of its assets (in view of the NFE project) would positively reflect in its financials in the future, he added.

GIS’ drilling business is the only oil and gas onshore drilling services provider in Qatar and the business has a significant market share for the off-shore drilling segment in the country.

GDI is currently bidding various international opportunities in drilling with international and national oil companies for diversifying its geographical client base.

Earlier, GIS chairman Sheikh Khalid bin Khalifa al-Thani told shareholders that the top priority is to reposition the group's core oil and gas services business by minimising costs and maximising asset utilisation to become more efficient and better able to leverage its domestic and global strengths to increase market share and shareholder value.