Adnoc Drilling, which now has 32 offshore jack-up rigs, has plans for further fleet growth. Photo: Adnoc
Adnoc Drilling, which now has 32 offshore jack-up rigs, has plans for further fleet growth. Photo: Adnoc
Adnoc Drilling, which now has 32 offshore jack-up rigs, has plans for further fleet growth. Photo: Adnoc
Adnoc Drilling, which now has 32 offshore jack-up rigs, has plans for further fleet growth. Photo: Adnoc

Business

Energy

Adnoc Drilling acquires two jack-up rigs for $140m to support production growth

The acquisition is the fourth announced by the company in recent months, in line with its three-year guidance on capital expenditure and revenue growth

Aarti Nagraj
Aarti Nagraj

September 26, 2022

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Adnoc Drilling, the largest national drilling company in the Middle East by rig fleet size, has signed a deal to acquire two more offshore jack-up rigs for $140 million as it seeks to boost production capacity.

The acquisition is the fourth announced by the company in recent months, following agreements signed in May, June and August for a total of four rigs.

Adnoc Drilling owned 105 rigs as of July 31 and expects the two new rigs to commence operations by the end of 2022, it said in a statement on Monday to the Abu Dhabi Securities Exchange, where its shares are traded.

The latest acquisition falls under the company’s three-year guidance on capital expenditure and revenue growth, it said.

The move underpins the company's "accelerated growth strategy as a key enabler of Adnoc’s production capacity", said Abdulrahman Al Seiari, chief executive of Adnoc Drilling.

"The acquisition of these new jack-up rigs consolidates our position as the owner of one of the largest operating jack-up fleets in the world and will significantly boost company revenues, cash flow and shareholder returns over the coming years.”

Adnoc Drilling, which listed on the ADX last October, has rapidly expanded operations in recent months.

In August, it was awarded two contracts worth $1.5 billion and $1.9bn by Adnoc Offshore to boost production capacity.

It also received two contracts worth $2bn linked to Adnoc's Hail and Ghasha development project in July.

Adnoc is investing heavily in expanding its production capacity as it seeks to raise its output to five million barrels per day by 2030.

Its board approved plans last year to spend Dh466bn ($126.88bn) between 2022 and 2026 to expand upstream production capacity and downstream portfolio, as well as its low-carbon fuels business and clean energy ambitions.

In August, Adnoc Drilling reported a more than 19 per cent rise in second-quarter net income amid continued expansion.

Net profit for the three-month period to the end of June rose to $204.85m, while revenue for the quarter increased by 11 per cent to $669m.

The company, which now has 32 offshore jack-up rigs, has plans for further fleet growth, it said on Monday.

Capital investment for the latest acquisition will be recorded in 2022 and 2023, with the financial benefits included thereafter, it added.

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The biog

Name: Dhabia Khalifa AlQubaisi

Age: 23

How she spends spare time: Playing with cats at the clinic and feeding them

Inspiration: My father. He’s a hard working man who has been through a lot to provide us with everything we need

Favourite book: Attitude, emotions and the psychology of cats by Dr Nicholes Dodman

Favourit film: 101 Dalmatians - it remind me of my childhood and began my love of dogs 

Word of advice: By being patient, good things will come and by staying positive you’ll have the will to continue to love what you're doing

Interview
If you go

The flights

There are direct flights from Dubai to Sofia with FlyDubai (www.flydubai.com) and Wizz Air (www.wizzair.com), from Dh1,164 and Dh822 return including taxes, respectively.

The trip

Plovdiv is 150km from Sofia, with an hourly bus service taking around 2 hours and costing $16 (Dh58). The Rhodopes can be reached from Sofia in between 2-4hours.

The trip was organised by Bulguides (www.bulguides.com), which organises guided trips throughout Bulgaria. Guiding, accommodation, food and transfers from Plovdiv to the mountains and back costs around 170 USD for a four-day, three-night trip.

 

Reputation

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(Big Machine Records)

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

European arms

Known EU weapons transfers to Ukraine since the war began: Germany 1,000 anti-tank weapons and 500 Stinger surface-to-air missiles. Luxembourg 100 NLAW anti-tank weapons, jeeps and 15 military tents as well as air transport capacity. Belgium 2,000 machine guns, 3,800 tons of fuel. Netherlands 200 Stinger missiles. Poland 100 mortars, 8 drones, Javelin anti-tank weapons, Grot assault rifles, munitions. Slovakia 12,000 pieces of artillery ammunition, 10 million litres of fuel, 2.4 million litres of aviation fuel and 2 Bozena de-mining systems. Estonia Javelin anti-tank weapons.  Latvia Stinger surface to air missiles. Czech Republic machine guns, assault rifles, other light weapons and ammunition worth $8.57 million.

Updated: September 26, 2022, 7:47 AM
AdnocEnergyUAEAbu Dhabi