ADNOC Drilling shareholders to see their dividends increase by at least 10% from 2024-28
ADNOC entity says it would also consider additional dividends for 2024-28
Dubai: Shareholders in ADNOC Drilling have just received a boost - the company is bringing in a new dividend policy of increasing its payout by 'at least' 10 per cent annually over the next 5 years.
At the same time, the Board of Directors may 'consider additional dividends' over and above this 'after taking into account growth opportunities'. And while maintaining the net debt/EBITDA up to 2x (excluding any transformative M&A deals).
The new dividend policy will be placed for shareholder approval at an upcoming general assembly meeting. The date is to be confirmed. Dividends are expected to be paid semi-annually with a final dividend distributed in the first-half and an interim dividend in the second-half of each year.
Some of the listed ADNOC affiliated entities have announced increases on their dividend payouts, but mostly by 5 per cent apiece.
Pulling out higher Q1-24 numbers
The announcement comes after ADNOC Drilling struck a strong set of numbers for Q1 with 'record' revenue and EBITDA. Revenues came to $886 million, increasing 24 per cent year-on-year and 5 per cent sequentially. This then led to an EBITDA growth of 31 per cent year-on-year - and 3 per cent sequentially to $437 million, with a margin of 49 per cent.
"ADNOC Drilling continues to capitalize on its unique position as a critical enabler of ADNOC’s plans to responsibly accelerate production capacity growth to 5 million barrels per day by 2027," said a statement. "The company’s strong performance in the quarter was mainly driven by the full operational impact of land and jack-up rigs commissioned in stages over the course of 2023 and the first quarter 2024."
Tax provisions
The Q1 numbers will translate into d $27 million in taxes. This is for the 9 per cent UAE corporate tax. "The company has invoiced the clients for the reimbursement of these taxes as per the contracts," said a statement.
Compared with its Q4-23 tally of $329 million, the latest net profit represents a 16 per cent drop. This came about from a $55 million reduction in depreciation in the fourth quarter, '$42 million of which was the one-off full-year impact, due to the change in remaining useful life and residual value estimates of assets, along with a more granular approach in asset recognition'.
If that $42 million one-off is excluded, the sequential decrease in normalized net profit would have been 4 per cent, and which was mainly from the higher interest expenses in the first quarter of 2024.
The fleet availability was 97 per cent at the end of the quarter. In addition, oilfield services continued to grow year-on-year with the number of IDS rigs increasing sequentially to 49 rigs from 48 in the quarter before.
ADNOC Drilling Company has been awarded by a $1.7 billion contract by ADNOC to provide drilling and associated services for the recovery of unconventional energy resources. The contract will see Turnwell deliver 144 unconventional oil and gas wells.
According to Abdulmunim Saif Al Kindy, ADNOC Upstream Executive Director and Vice-Chairman of ADNOC Drilling, “Utilizing partnerships, innovative AI, digitalization and advanced technologies we will unlock Abu Dhabi’s abundant energy resources, to drive value for the UAE.”
Update on new venture
In early January, ADNOC Drilling Company aligned with Alpha Dhabi Holding on a joint venture called 'Enersol' based out of Abu Dhabi Global Market. The former holds 51 per cent in the entity.
For its first investment, Enersol acquired 25 per cent in US-based Gordon Technologies, a provider of 'measurement while drilling' technology to the oil and gas industry in the US. This stake has been valued at around $180 million.