Adnoc Drilling reports 6% rise in 2021 income on revenue jump

The company's board recommends a final dividend of $325 million for second half of 2021

An Adnoc drilling rig in action. The company has achieved $2.27 billion in revenue for the 2021 financial year. Image courtesy of Adnoc

Abu Dhabi’s National Oil Company’s drilling subsidiary, Adnoc Drilling, reported a 6 per cent rise in its full year 2021 net income on the back of higher revenue as the company continues to support Adnoc’s efforts to grow its production capacity.

Net profit for the 12-month period to the end of December climbed to $604 million, from $569m recorded for the same period a year earlier, Adnoc Drilling said in a regulatory filing on Friday, to the Abu Dhabi Securities Exchange, where its shares are traded.

Revenue for the reporting period rose to $2.27 billion from $2.09bn reported at the end of 2020. The company attributed the rise in revenue to additional drilling services provided to Adnoc, Adnoc Onshore and Adnoc Offshore operations.

"The strong full year results and successful strategic execution are testament to the vital role that the company is playing in enabling significant production capacity growth for Adnoc as well as the UAE’s objective to achieve gas self-sufficiency," said Dr Sultan Al Jaber, UAE Minister of Industry and Advanced Technology, Adnoc managing director and group chief executive, and chairman of Adnoc Drilling.

The company's board is recommending a final dividend of $325m for the second half of 2021, bringing the total dividend for the financial year to $685m, in line with the guidance provided at the time of the company's initial public offering.

"We are also able to reconfirm our guidance objective of 5 per cent annual growth in dividend per share from 2022-2026,” Dr Sultan said.

Adnoc Drilling raised more than $1.1bn in September from its initial public offering, which was oversubscribed more than 31 times.

State-controlled oil and gas producer Adnoc remains Adnoc Drilling's majority shareholder, with an 84 per cent stake. US energy services company Baker Hughes, which entered into a strategic partnership with Adnoc Drilling in October 2018, has 5 per cent and US contract oil and gas driller Helmerich & Payne holds 1 per cent shareholding in the company.

Adnoc Drilling, which is the largest national drilling company in the Middle East by rig fleet size, said its revenue from onshore operations climbed 6 per cent to $1.14bn in the last financial year, largely driven by new rigs and rig reactivations. Offshore Jackup operations revenue for the reporting period was $596m, broadly unchanged from $597m in 2020.

The company’s oilfield services segment also performed well throughout the year, driven by higher activity from continued expansion, with revenue increasing 48 per cent year-on-year to $329m.

Fleet utilisation rate last year reached 96 per cent and the company’s cash from operations jumped 7 per cent year-on-year to $1.08bn, which equates to cash conversion of 104 per cent of its earnings before interest, taxes, depreciation and amortisation.

Capital expenditure for the full year increased 34 per cent to $505m in 2021, as the company continued to pursue expansion plans.

"We remain very enthusiastic about the year ahead as we build out our drilling assets and oilfield services with our strategic partners Baker Hughes and Helmerich & Payne," said Abdulrahman Al Seiari, chief executive of Adnoc Drilling.

"Technology and innovation will be at the heart of that programme, and we are looking forward to reporting on a number of important milestones for the company in the months to come."

In December, Adnoc Drilling signed a deal with Helmerich & Payne to improve its land rig operational performance. The Rig Enablement Framework Agreement between the two companies will also support Adnoc Drilling’s growth and expansion plans.

Also in December, 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.