Adnoc Drilling bags $3.8 billion contract to strengthen growth

Adnoc Drilling Company on Thursday announced that it has signed a five-year Drilling Services Agreement with Adnoc Onshore for the continued provision of drilling, workover and other well services. The contract will run for up to 5 years, for a total value of $3.8 billion.

Structured to drive efficiency in work crews, rig move time and maintenance scheduling, the contract benefits both Adnoc Drilling and Adnoc Onshore. It underpins Adnoc Drilling’s unique position as sole drilling services provider to Adnoc and will advance Adnoc Drilling’s ambitious growth and expansion plans.

Abdulrahman Abdullah Al Seiari, Chief Executive Officer of Adnoc Drilling, said, “Adnoc Onshore is a valued and long-standing customer and this contract award further extends a 50-year profitable and unique partnership. I am delighted, that working together, we will continue to drive value for Adnoc and the UAE, delivering on the 2030 strategic production capacity and gas self-sufficiency targets.

Advanced technologies and digitalisation are at the heart of this agreement, as Adnoc Drilling continues to improve efficiencies, drive further growth opportunities, while minimising our environmental footprint.” Following its record ADX listing on Oct.3, 2021, Adnoc Drilling released its first earnings on Nov.10, 2021, showing strong and resilient growth for the third quarter and first nine months of the year. The Company’s growth journey includes geographical expansion and further development of Adnoc Drilling’s Oilfield Services offering.

Adnoc Drilling is the only provider of fully Integrated Drilling Services (IDS) in the region and since 2018, the Company has delivered more than $250 million of savings to its customers through the delivery of these wells.

Earlier Adnoc’s drilling subsidiary reported a 48 per cent increase in third-quarter net profit, backed by its onshore and oilfield services segments.

Net profit climbed to $178 million, from $120m in the same period a year earlier, Adnoc Drilling said in a regulatory filing on Wednesday to the Abu Dhabi Securities Exchange, where its shares are traded.

Revenue for the three-month period to the end of September rose 11 per cent to $571 million.

“With double-digit revenue growth, Adnoc Drilling has demonstrated exceptional financial performance and commercial resilience, reflected in a very robust third quarter,” said Dr Sultan Al Jaber, Minister of Industry and Advanced Technology and managing director and group chief executive of Adnoc.

“These impressive results follow Adnoc Drilling’s record ADX listing in early October and were well above market forecasts.”

Adnoc Drilling raised more than $1.1 billion in September from its initial public offering.

Adnoc maintains its majority 84 per cent stake in Adnoc Drilling while US energy services company Baker Hughes, which entered into a strategic partnership with Adnoc Drilling in October 2018, has a 5 per cent stake and US contract oil and gas driller Helmerich & Payne holds 1 per cent.

Adnoc Drilling’s capital expenditure for the third quarter surged to $171 million, from $21 million in the same period a year ago. The company’s capital expenditure increased more than threefold in the first nine months of the year to $454 million.

The company’s nine-month net profit rose 9 per cent to $460 million, while revenue climbed 12 per cent to Dh1.7 billion. Performance during the first nine months of the year was supported by growth in revenue from Adnoc Drilling’s onshore operations, which increased 10 per cent to $847 million. Third-quarter revenue for this segment increased 9 per cent to $279 million.

Revenue of the company’s offshore jackup portfolio rose 2 per cent to $157 million in the third quarter. Revenue at Adnoc Drilling’s offshore island and oil field services segments grew 11 per cent to $166 million and 50 per cent to $231 million in the first nine months of the year, respectively.

The company’s earnings before interest, tax, depreciation, and amortisation increased 11 per cent to $785 million in the first nine months of 2021.

“As we look to the final quarter and to 2022, we see our operations returning to normal post-pandemic and we expect to continue to make significant progress in the execution of our long-term strategy,” said Adnoc Drilling chief executive Abdulrahman Al Seiari.

The company plans to pursue growth by issuing a number of mega-tenders to expand its discrete services portfolio.

After its IPO, Adnoc Drilling was included in three of FTSE Russell’s global indices – the FTSE Emerging Index, the FTSE Global Large Cap Index and the FTSE All-World Index.