Adnoc Gas is targeting to pay a dividend of $1.625 billion in the fourth quarter of 2023. Image Credit: Shutterstock

Abu Dhabi: Two Adnoc group companies Adnoc Gas and Adnoc Drilling reported strong quarterly results on Thursday.

Adnoc Gas, the group’s integrated gas processing company, reported revenue of $5.2 billion, compared to pro forma adjusted revenue of $6.2 billion in the year-ago period. These were the company’s first quarterly financial results since its formation and the initial public offering.

Net income for the period was $1.3 billion versus pro forma adjusted net income of $1.2 billion in the year-ago period. Net income included a $300 million benefit from recognising a deferred tax asset, a non-reoccurring item, following the formation of the company. Free cash flow in Q1 stood at $1.1 billion compared to illustrative free cash flow of $1.4 billion in the same period last year.

During the reporting period, Brent crude oil prices, which are used for gas pricing, declined nearly 24 per cent in comparison to the year-ago period. Despite this, Adnoc Gas was able to maintain a robust EBITDA margin of 34 per cent in Q1 2023, only 1 per cent lower than in Q1 2022.

New milestones

As the company continues to grow its export business, the first-ever LNG cargo to be shipped to Germany from the Middle East was delivered in February from Abu Dhabi to the Elbehafen floating LNG terminal in Brunsbüttel. Later, Adnoc Gas announced in early May the signing of a three-year agreement with TotalEnergies, a multinational energy company, for the export of LNG from 2023 to 2025.

Ahmed Alebri, CEO of ADNOC Gas, said: “ADNOC Gas has delivered robust financial results during Q1 2023, despite a significant contraction in market prices from the near-all-time highs experienced during 2022. Our performance during this period demonstrates our resilience and ability to generate attractive returns. We maintained a solid operating margin thanks to our ongoing focus on operational excellence and cost optimisation and reported healthy net income of $1.3 billion.”

Adnoc Gas is targeting to pay a dividend of $1.625 billion in the fourth quarter of 2023 in respect of the first half of 2023. A further $1.625 billion dividend is targeted to be paid in the second quarter of 2024 in respect of the second half of 2023. Thereafter, ADNOC Gas expects to grow the annual target dividend amount from $3.25 billion by a growth rate of 5 per cent per annum on a dividend per share basis over the period 2024-27.

Adnoc Drilling

Adnoc Drilling’s first quarter revenue increased to $716 million, up 19 per cent year-on-year. Revenue growth was achieved across all segments, with Offshore Jack-up and Oilfield Services (OFS) leading the way, increasing 28 per cent and 43 per cent, respectively. EBITDA growth tracked the uptick in revenue, also increasing 19 per cent to $333 million. Net profit for the quarter reached $219 million, up 25 per cent year-on-year.

Abdulrahman Abdullah Al Seiari, CEO, ADNOC Drilling, commented: “Our first quarter results are particularly pleasing as they clearly demonstrate the effective execution of our strategy, to grow earnings by expanding our fleet and our offering, for the benefit of our customers and our shareholders.

“To maximise value for shareholders now and into the future, we will continue to secure high-quality, long-term contracts that offer superb future earnings visibility, as well as protection against market volatility. At the same time, we will maintain our focus on operational excellence and sustainable operations, as well as capitalise on our unique position within the market as we remain firmly on track to deliver our 2023 guidance.”

In the first quarter this year, Adnoc Drilling announced the signing of an agreement to purchase 10 newbuild hybrid power land drilling units in direct response to the group’s accelerated production capacity targets and sustainability plans. The new hybrid rigs utilise high capacity batteries to improve power delivery while reducing greenhouse gas emissions by up to 15 per cent. During the quarter, the company also announced the signing of a Memorandum of Understanding with Masdar to explore geothermal energy opportunities, supporting the responsible advancement of the energy transition in the UAE and globally.