Adnoc Drilling signs deal to boost performance of land rigs

Adnoc Drilling, the largest national drilling company in the Middle East by rig fleet size, signed a deal with US-based contract drilling company Helmerich & Payne to improve the Abu Dhabi company’s land rig operational performance.

The Rig Enablement Framework Agreement between the two companies will also support Adnoc Drilling’s growth and expansion plans, it said in a statement on Monday to the Abu Dhabi Securities Exchange, where its shares are traded.

Focused on improving drilling efficiencies and saving operational costs, the framework agreement builds on the asset purchase deal and initial public offering cornerstone investor pact the two companies announced in September.

The agreement is a “natural evolution of both our strategic alliance with H&P and Adnoc Drilling’s growth trajectory”, said Abdulrahman Al Seiari, chief executive of Adnoc Drilling.

“The resulting efficiency gains will deliver enhanced operational excellence, in turn delivering even greater value to our shareholders.”

The partnership allows sharing of global best practices, further optimising the company’s rig fleet and “turbocharges Adnoc Drilling’s significant competitive advantage”, helping it cement its position as the largest national drilling company in the Middle East, Mr Al Seiari said.

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As a cornerstone investor, H&P has committed $100 million to Adnoc Drilling’s IPO, subject to a three-year lock-up period.

The share sale, oversubscribed more than 31 times, was the largest listing on the ADX, raising over $1.1 billion.

Investment into Adnoc Drilling – which owns 96 rigs and provides drilling rig hire services and rig-related services to Adnoc Group – is a “testament to our belief in what Adnoc Drilling and H&P can achieve together”, said John Lindsay, H&P’s president and chief executive.

The finalisation of the latest agreement with Adnoc provides further opportunity to build on the strategic relationship and combine capabilities to deliver operational performance, he added.

Earlier this month, Adnoc Drilling agreed a five-year, $3.8bn contract with Adnoc Onshore for the continued provision of drilling, workover and other well services that will drive efficiency in work crews, rig move time and maintenance scheduling.

Adnoc Drilling reported a 48 per cent increase in third-quarter net profit, backed by its onshore and oilfield services segments. Net profit climbed to $178m, from $120m in the same period a year earlier.

Adnoc has an 84 per cent stake in Adnoc Drilling, while US energy services company Baker Hughes, which entered into a strategic partnership with the company in October 2018, has a 5 per cent stake. H&P holds 1 per cent shareholding in the company.