Dubai: ADNOC Drilling returned some power packed growth numbers for the first six months, enough to deliver revenues of $1.8 billion plus, higher by 26 per cent from a year ago. The growth came in from ‘all business segments’, and which was capped by the Board of Directors approving an interim dividend of $394 million, higher by 10 per cent from a year ago.
This works out to 9.05 fils a share. In June, its shareholders had approved a 'progressive' dividend policy that will see payout grow by 'at least 10 per cent per annum' on a dividend per share basis over the next five years. (The Board may approve additional dividends over and above the policy after 'considering free cash flow and accretive growth opportunities'.)
“ADNOC Drilling has continued to deliver on its strategic initiatives and has successfully closed the first half of the year on a strong note, achieving multiple milestones,” said Abdulrahman Abdulla Al Seiari, CEO.
Net profit for the period was $570 million, up 28 per cent, while the EBITDA margin was at a stellar 48-50 per cent.
Major win
In July, ADNOC Drilling was awarded a $733 million contract for three newbuild island rigs. The contract's 'accretive day-rates' will help long-term contracted cash flow and earnings visibility', the company said.
As for the medium term, the ADNOC Drilling fleet is expected to total 'at least' 148 by 2026, including the three new rigs in the July contract as well as an earlier announced three land rigs for the 'initial phase of the unconventionals development'. (At the end of June, the fleet consisted of 140 rigs (136 owned plus four lease-to-own land rigs.)
The capital expenditure will be maintained at $750 million to $950 million.
Higher free float
ADNOC recently offered additional ADNOC Drilling shares through a bookbuild offer to professional investors in the UAE and institutional investors elsewhere. The $935 million placement constituted 880 million shares priced at Dh3.90, representing 5.5 per cent of ADNOC Drilling’s total share capital, with ADNOC retaining a majority 78.5 per cent stake.
The was the 'largest-ever accelerated bookbuild of a publicly listed company in the UAE'. It raised ADNOC Drilling’s free float by 50 per cent, 'enhancing liquidity and providing a pathway for broader indexation'.
'Thousands and thousands of wells'
In many ways, ADNOC Drilling is just about getting started.
“If you look at the number of wells we are drilling per year, it’s around 700-800 wells per year,” said Youssef Salem, CFO. “When we get to a fleet of 148 rigs by 2026, we will be drilling around 1,000 wells a year.
“Now, just think that ADNOC’s future program in terms of wells, they want to drill thousands and thousands, both conventional and unconventional. It will happen over decades.
“So, in terms of our capacity perspective, it’s still very, very early days in terms of overall field expansion, and in the number of rigs and wells.”
More contracts from outside?
Beyond ADNOC and UAE, the drilling subsidiary is in line for new possibilities, notably in Kuwait. It has been pre-qualified by Kuwait Oil Company (KOC) to be among its approved contractors list for drilling, rig and ancillary services.
"Currently, our rig fleet is fully engaged in UAE operations - we will need additional ones to service future requirements in Kuwait. We are working on securing the additional rigs required for Kuwait, as well as in Oman, where we are also active."
If that's the case, will the capex of $750 million to $950 million be enough? "These projections are purely our organic, in-country needs, which means for the UAE operations alone," said Salem. "We will have separate numbers for our international and inorganic growth requirements."
