Tuesday, 29 November, 2022
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Adnoc Drilling to buy offshore jack-up rigs for $320m

Adnoc Drilling to buy offshore jack-up rigs for $320m

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Adnoc Drilling, the largest national drilling company in the Middle East by rig fleet size, has signed an agreement to acquire three offshore jack-up drilling rigs for $320 million as it expands and helps parent company Adnoc to increase its crude oil production capacity.

The cost of the acquisition is part of the company’s three-year guidance on capital expenditure and its plans to expand its businesses, Adnoc Drilling said in a statement on Monday to the Abu Dhabi Securities Exchange, where its shares are traded, report agencies.

“We continue to execute our bold growth strategy as a key enabler of Adnoc’s ambitious production capacity targets,” Abdulrahman Al Seiari, chief executive of Adnoc Drilling, said.

Adnoc Drilling, which is majority owned by Adnoc, owns 108 rigs as of the end of September. The company was listed on the ADX in October last year and has rapidly expanded operations in recent months.

“The latest acquisition of these premium rigs will be central to our success, and cement our position as one of the world’s largest jack-up rig fleet owners, as we strive to significantly boost revenues and shareholder returns over the coming years,” said Mr Al Seiari.

Adnoc Drilling won contracts worth $8.85 billion this year and plans to acquire dozens of rigs by 2025 to support Adnoc's oil production capacity target of 5 million barrels per day by 2030.

With the latest purchase, the company will have 30 offshore jack-up rigs in its fleet, Adnoc Drilling said.

The company is looking to expand into the GCC as drilling activity increases after a surge in crude oil prices, Mr Al Seiari told The National in an interview last week.

The Middle East’s rig count, an early indicator of oil and gas production, stood at 326 last month, up nearly 19 per cent from the same period a year earlier, according to energy services firm Baker Hughes.

The aim of any potential mergers and acquisition activity or stake purchases would be to expand into the Gulf region first, Mr Al Seiari said, adding that the company would take it “step by step”, given a large backlog of contracts in Abu Dhabi.

Adnoc Drilling has provided integrated drilling services to Adnoc Onshore and Offshore since 2019. The company’s highly competitive position, integrated capabilities and technical expertise have helped to increase the efficiency of Adnoc’s drilling operations.

Last week, the company reported a 6 per cent increase in third-quarter profit on the back of higher revenue from its onshore and oilfield services segments.

Net profit for the three-month period to the end of September climbed to $189 million from the same period a year earlier, while revenue during the period rose 17 per cent year-on-year to $671 million.

Earlier this month, Adnoc awarded three framework agreements valued at $4 billion to support its goal of increasing crude oil production amid growing global demand for oil and gas with a lower carbon intensity.

The contracts were awarded to Adnoc Drilling and US-based oilfield services providers Schlumberger NV and Halliburton Company. The agreements, which cover Adnoc’s onshore and offshore operations, will run for five years, with an option for a further two years.

Adnoc owns an 84 per cent stake in Adnoc Drilling. Baker Hughes holds 5 per cent, while US contract oil and gas driller Helmerich & Payne holds a 1 per cent stake.