Adnoc Drilling debuts on Abu Dhabi bourse with $10bn market cap

The company’s stock surges as high as 33% during trading on Sunday

An Adnoc Drilling rig. The company was officially listed on the Abu Dhabi Securities Exchange on Sunday. Photo: Adnoc

Adnoc Drilling made a strong debut on the Abu Dhabi bourse after its listing on Sunday, following a successful initial public offering last week.

The drilling arm of Abu Dhabi National Oil Company was officially listed on the Abu Dhabi Securities Exchange (ADX), with the stock closing at Dh2.95 on Sunday, up 28.2 per cent compared to its final IPO price of Dh2.30. It surged as high as Dh3.05 during the day.

Adnoc Drilling raised $1.1 billion from the IPO last week after it offered 11 per cent of the company’s shares.

“Today’s listing will enable domestic and international investors alike to benefit from the growth trajectory of a company that sits at the very heart of Adnoc’s ambitious growth plans,” said Dr Sultan Al Jaber, Minister of Industry and Advanced Technology and managing director and group chief executive of Adnoc.

“In addition, this highly successful IPO will further strengthen and broaden Abu Dhabi’s vibrant equity capital markets, while driving the UAE’s economic growth, diversification and attracting foreign direct investment.”

Adnoc Drilling is one of the largest drilling companies in the Middle East, operating 107 onshore, offshore and island rigs, of which 11 are rented. The company, which began operations in 1972, has expanded its fleet of rigs, adding 67 since 2010, in line with the growth in oil and gas production capacity at Adnoc.

The share offering attracted considerable interest, with total gross demand for the IPO amounting to over $34bn, implying an oversubscription level in excess of 31 times.

Adnoc Drilling is one of the 10 largest companies on the ADX based on a market capitalisation at listing of approximately $10bn, helping to further diversify and strengthen the exchange and increasing investor choice.

“The significant demand for this offering, emphasised by the considerable oversubscription, reflects the investment community’s high confidence in Adnoc Drilling and the attractiveness of Adnoc and the UAE as a compelling investment destination,” Dr Al Jaber said.

Adnoc will continue to maintain its majority 84 per cent stake in Adnoc Drilling. US energy services company Baker Hughes, which entered into a strategic partnership with Adnoc Drilling in October 2018, will retain its 5 per cent interest. US contract oil and gas driller Helmerich & Payne will hold 1 per cent through its IPO cornerstone investment announced on September 8, 2021.

“The Adnoc Drilling listing will serve to further draw in new investors and issuers and bolster the exchange’s market capitalisation, which exceeded Dh1 trillion for the first time in 2021,” Saeed Al Dhaheri, chief executive of ADX, said.

Adnoc Drilling’s IPO is the second major listing this year in Abu Dhabi and is the largest on the Abu Dhabi stock market.

In July, Al Yah Satellite Communications (Yahsat), a unit of Mubadala Investment Company, raised about $730 million through a public offering.

"Adnoc Drilling is on an upward growth trajectory ... and plans to continue to support Adnoc as it delivers on its 2030 growth target to increase oil production capacity to 5 million barrels per day as well as the UAE’s goal to be gas self-sufficient," Abdulrahman Al Seiari, chief executive of Adnoc Drilling, said.

The company's stock will start trading on the Abu Dhabi bourse under the symbol ADNOCDRILL and ISIN AEA007301012, Adnoc said.

The latest listing comes as global oil prices continue to trade higher due to improved demand. Brent, the global benchmark was trading above $79 per barrel on Sunday.

The gains made by Adnoc Drilling “show investor appetite for fundamentally strong stocks in the region, especially in Abu Dhabi, which is the best performing market globally this year,” Junaid Ansari, senior vice president of investment strategy and research at Kamco Invest told The National.

Investors are also keen to be a part of Abu Dhabi’s plan to expand oil production to 5 million bpd by 2030, of which Adnoc Drilling would be a key beneficiary, he said.

Meanwhile, the commodity rally with oil prices hovering around $80 per barrel is expected to give a big boost to the company’s revenues and bottom line this year, Mr Ansari added.