Deal highlights:
■ Baker Hughes, a GE subsidiary, will acquire a 5 per cent stake for $550 million in ADNOC Drilling.
■ Transaction includes an activity and milestone-based deferred consideration mechanism, beginning in 2023, linked to the development of Adnoc’s new conventional and unconventional development programme.
■ Partnership will support ADNOC’s target to reduce drilling time by 30 percent by the end of 2019.
■ BHGE will receive a seat on ADNOC Drilling’s Board of Directors.
Dubai: The energy services giant Baker Hughes is taking up 5 per cent in Adnoc Drilling in a deal that values the latter at around $11 billion.
Baker Hughes, GE subsidiary, will also be sole provider of “proprietary” equipment and technology for integrated drilling offering and thus supporting Adnoc Drilling’s future growth.
This follows and agreement that Abu Dhabi National Oil Co. (Adnoc) struck with the US-based driller.
The partnership represents the “first time Adnoc has brought an international strategic partner to acquire a direct equity stake in one of its existing services businesses," it said in a statement.
Adnoc Drilling is the largest of its kind in the Middle East and the sole provider of drilling rigs and associated services to the Adnoc Group.
The deal is expected to “generate predictable, long-term revenue streams and growth in the market for both companies through a mutually beneficial commercial structure, pre-defined work plans and future dividends.”
Growth strategy
“The partnership forms an important building block of Adnoc’s 2030 smart growth strategy as we continue to drive operational efficiency and performance, and unlock even more value from every barrel we produce,” said Sultan Ahmad Al Jaber, UAE Minister of State and Adnoc Group CEO.
The combined capabilities and expertise from this partnership will create greater drilling efficiencies and faster well completion times, generate attractive returns and enable the transfer of knowhow and access to technology.
“Importantly, it will also drive job creation and economic growth, as well as maintain a healthy level of competition in the dynamic UAE oilfield services market.”
Adnoc Drilling and Baker Hughes will set up an advisory board with representation from both to oversee the implementation and ongoing operations.
The partnership will enable ADNOC to capture more value from every barrel of oil it produces as it plans to grow its conventional drilling activity by 40 per cent by 2025 and substantially ramp up the number of its unconventional wells.
