FTSE adds Adnoc Drilling to three indices as board approves growth plans after IPO

Drilling company plans to expand its oilfield services segment

An oil pipeline control head sits on display outside the entrance to the Abu Dhabi National Oil Company (ADNOC) headquarters in Abu Dhabi, United Arab Emirates, on Thursday, Feb. 22, 2018. Adnoc is seeking to create world’s largest integrated refinery and petrochemical complex at Ruwais. Photographer: Christopher Pike/Bloomberg

Index publisher FTSE Russell added Adnoc Drilling to three of its global equity indices as the company's board approved its growth plans following its 11 per cent share sale in a public offering.

Its shares made their debut earlier this month on the Abu Dhabi Securities Exchange, surging 33 per cent during the first day of trading on October 3. The market value of the company, a subsidiary of the Adnoc Group, was about $13 billion as of Sunday morning trading.

The board approved Adnoc Drilling's five-year business plan for 2022 to 2026, as well as its budget for the next financial year.

"Adnoc Drilling will continue to play a pivotal and leading role in enabling Adnoc's ambitious production capacity growth plans, underpinned by the core resolutions adopted at the inaugural board meeting post listing, including the company’s robust business plan, focused on sustained and enhanced growth," said Dr Sultan Al Jaber, Minister of Industry and Advanced Technology and managing director and group chief executive of Adnoc.

FTSE Russell Indices, which Adnoc Drilling was added to, are used by investors to benchmark investment performance and portfolio compositions.

"It also further increases the attractiveness of Adnoc Drilling’s shares to the international investor community, with the potential to add to the diversification of its overall investor base," Dr Al Jaber said of the inclusion to global indices.

The drilling subsidiary plans to expand its discrete services portfolio and market share in the oilfield services segment and plans to issue a number of "mega-tenders" in Abu Dhabi.

After the issue of such tenders, the company plans to expand its portfolio outside of the integrated drilling services segment, with the first contracts set to be awarded in 2022.

Adnoc Drilling plans to drill "thousands" of wells by 2030 as part of its IPO cornerstone investment with Helmerich & Payne. Two of eight land rigs are expected to begin operations early next year, the company said.

The company raised $1.1 billion from the IPO earlier this month. The share offering attracted considerable interest, with total gross demand for the IPO amounting to more than $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 a listing of about $10bn. It has helped to further diversify and strengthen the exchange, as well as increase investor choice.

Adnoc will maintain its majority 84 per cent stake in Adnoc Drilling while 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.

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, better known as Yahsat, a unit of Mubadala Investment Company, raised about $730 million through a public offering.

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.

Updated: October 17th 2021, 7:32 AM