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Akbar Novruz

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Caspian Drilling Company Limited (CDC), in which Azerbaijan's State Oil Company (SOCAR) holds a controlling stake, recorded a net profit of $62.13 million in 2025, down 7.4% from $67.12 million a year earlier, despite improvements in revenue and operating profitability.

According to the company's audited annual financial statements, revenue increased by 1.2% year on year to $201.15 million, while the cost of sales declined by 8.5% to $126.55 million.

The reduction in production and service costs helped lift gross profit by 23.1% to $74.60 million, indicating an improvement in the profitability of the company's core drilling operations.

Operating profit also increased, rising by 15.7% to $73.39 million.

However, higher administrative expenses and a substantial change in the company's income tax position weighed on its final financial result.

General and administrative expenses rose by 24.3% to $14.71 million, while other operating income declined by 49.8% to $11.46 million.

Despite these developments, CDC's pre-tax profit increased by 23.1% to $78.99 million.

The decline in net profit was primarily associated with a change in taxation. While the company recorded an income tax benefit of $2.98 million in 2024, it recognised an income tax expense of $16.85 million in 2025.

The shift in the tax position more than offset the increase in pre-tax earnings, resulting in lower net profitability for the year.

Nevertheless, the company's accumulated retained earnings continued to grow, increasing by 18.4% from $338.49 million to $400.62 million.

Assets and equity increase

CDC's financial position strengthened in several areas during 2025.

Total assets rose by 9.4% to $834.47 million, while shareholders' equity increased by 9.9% to $686.92 million.

Total liabilities grew by 6.8% to $147.55 million.

The company's cash and cash equivalents increased by 3.3% to $242.11 million, while trade and other receivables rose by 14.1% to $46.27 million.

Inventories also increased, reaching $58.81 million, up 6.6% compared with the previous year.

Meanwhile, trade and other payables climbed by 47.2% to $28.78 million, and the short-term portion of bank deposits declined by 14.4% to $27.39 million.

A notable change was recorded in the structure of CDC's balance sheet.

Long-term assets more than doubled, increasing by 108.6% to $441.86 million, while short-term assets declined by 28.8% to $392.61 million.

The change was partly associated with the classification of a loan granted to a related party.

According to the financial statements, a related-party loan amounting to $175.63 million was recognised among long-term assets at the end of 2025. At the end of 2024, $172.05 million of the loan had been classified as a short-term asset.

This classification change contributed to the increase in long-term assets and the corresponding reduction in short-term assets.

CDC also recorded growth in its physical and leased asset base.

Property, plant and equipment increased by 31.2% to $152.27 million, while right-of-use assets rose by 98.5% to $73.34 million.

Long-term liabilities climbed from $7.74 million to $66.30 million, whereas short-term liabilities fell by 37.7% to $81.25 million.

Capital expenditure rises as operating cash flow declines

The company increased spending on property, plant and equipment during the reporting year.

Funds allocated to acquiring these assets rose by 74.9% to $61.50 million, reflecting a substantial increase in investment expenditure.

At the same time, net cash generated from operating activities declined by 19.6% to $109.74 million.

The figures indicate that CDC maintained positive operating cash generation while allocating significantly more resources to capital expenditure.

The combination of higher operating profit, increased capital spending and lower operating cash flow illustrates differing trends across the company's financial performance in 2025.

Caspian Drilling Company was established in 1996 by SOCAR and the US-based Santa Fe Inc. to provide drilling services for offshore oil and gas operations in the Caspian Sea.

The company has a statutory capital of $285.85 million.

SOCAR currently owns 92.44% of CDC, while the remaining 7.56% is held by Singapore-registered Union Grand Energy PTE LTD.

The company's activities are focused on providing drilling services to the offshore oil and gas industry, making it part of Azerbaijan's wider energy services sector.

Despite the decline in net profit in 2025, CDC recorded higher revenue, stronger operating earnings, an increase in retained earnings and continued growth in its overall asset base.