Adnoc Drilling expects revenue to hit $3.6-$3.8 billion over medium term

Company expects its owned rig count to total 142 this year


Somshankar Bandyopadhyay

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Published: Thu 14 Mar 2024, 8:24 PM

Adnoc Drilling expects total revenue between $3.60 billion to $3.80 billion over the medium term, the company announced on Thursday.

Earnings before interest, taxes, amortisation and depreciation (Ebitda) is expected in the range of $1.70-$1.90 billion, with a margin range of 48-50 per cent and net profit of $1.05-$1.25 billion, with a margin range of 30-33 per cent. Moreover, Adnoc Drilling expects CapEx to be between $0.75-$0.95 billion, while maintaining a leverage ratio net debt/Ebitda below 2x in 2024, excluding material mergers and acquisitions.

Adnoc Drilling expects revenue to grow at a compound annual growth rate (CAGR) over the medium term in the 12-16 per cent range from 2023 base. Ebitda margins are estimated around 50 per cent with drilling margins exceeding 50 per cent and oilfield services margin in a range of 22 -26 per cent in the medium term. It also expects maintenance CapEx post-2024 of $200 - $250 million per annum.

Adnoc Drilling expects its owned rig count to total 142 this year, including the four new lease-to-own land rigs, by the end of 2024.

Unconventional resources opportunity

Abu Dhabi holds an estimated 22 billion barrels of recoverable unconventional oil resources, along with 160 trillion standard cubic feet of recoverable unconventional gas resources. This opportunity presents an outstanding transformational opportunity for Adnoc Drilling and the Company will be targeting this sector as a key segment for future growth.

On Thursday, the company announced that it has received shareholder approval of all agenda items at its Annual General Assembly Meeting, including distribution of its highly attractive final cash dividend for the year ending December 31, 2023.

Abdulrahman Abdulla Al Seiari, chief executive officer of Adnoc Drilling, said: “In 2023 we made excellent progress towards our strategic priorities, while supporting our customers to achieve theirs. Our industry leading HSE performance supported the delivery of record results in 2023. The company’s performance is testament to the hard work and dedication of our diverse and highly skilled people, and I thank them for their continued committment.

“2024 will be a landmark year for Adnoc Drilling. Our core integrated drilling services business is complemented by the establishment of Enersol, our strategic partnership with Alpha Dhabi, that will support the adoption of AI, digitization and advanced technology solutions to drive growth, value and efficiency. The year will also see us extend our presence further into the region, building on our entry to the Jordan market last year. We have always been ambitious at Adnoc Drilling and 2024 will be the year when we will realise those ambitions.”

Final dividend 2023

The final shareholder-approved dividend for 2023 amounts to $358 million (8.22 fils per share). This brings total dividend for the year to $717 million (16.45 fils per share), representing a 5 per cent year-on-year increase versus 2022. The dividend will be paid on or around April 3, 2024 to all shareholders of record as at March 21, 2024.

Adnoc Drilling reiterated its commitment to a dividend policy that is expected to grow by at least 5 per cent per annum on a dividend per share basis over the next three years (2024-2026).

Enersol driving AI and advanced-technology solutions

During 2023, the company established an innovative strategic partnership with Alpha Dhabi Holding PJSC (Alpha Dhabi). The joint venture (JV), which is known as Enersol, is targeting value-accretive, technology-enabled oilfield and energy service businesses globally that will drive future growth through the adoption of artificial intelligence (AI) and digitization across the OFS and energy value chain. The JV, of which the company owns 51 per cent, underpins Adnoc Drilling’s investment and expansion strategy by co-investing up to $1.5 billion.

Enersol is empowered to invest in, multiple businesses and foster a scalable ecosystem that will enhance market value and optimize operational efficiencies. A major driver of individual investment decisions will be ability to support wider energy transition ambitions, the UAE’s net zero agenda and economic diversification.

Ongoing fleet expansion

In 2024, the company will grow its integrated drilling fleet even further, with total rig count expected to reach 142. Each new advanced specification rig joining the fleet will use leading AI technologies to improve operational efficiency and boost revenues. The oilfield services segment is expected to experience continued, significant growth as the Company brings operational efficiency, through the deployment of advanced technologies, to its customers and extracts more value from every well delivered.

Growth beyond the borders

In 2023, Adnoc Drilling advanced its international growth strategy by mobilizing its first ever rig outside of the UAE. The Company signed its first international contract to deliver an integrated drilling services campaign for the Kingdom of Jordan’s Ministry of Energy and Mineral Resources. The company will be tendering for further contracts in Jordan.

Along with its activities in Jordan, Adnoc Drilling is now targetting other opportunities in the GCC region.

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