Adnoc Drilling's fourth-quarter net income surges 61% on record revenue

The company's fleet expansion programme pushed the rig count to 115 at the end of last year

An Adnoc Drilling rig at the Upper Zakum offshore oilfield. The company expects its strong earnings momentum to continue. Photo: Adnoc

Adnoc Drilling, the largest national drilling company in the Middle East by rig fleet size, reported a 61 per cent rise in its fourth-quarter net income as revenue hit a record amid efforts to support its parent in boosting production capacity.

Net profit for the three months to the end of December climbed to $234 million, the company said in a filing to the Abu Dhabi Securities Exchange, where its shares are traded.

Revenue during the reporting period rose by 27 per cent on an annual basis to $733 million, as additional rigs were added to the fleet to boost operations.

Net income for the 2022 financial year jumped 33 per cent to $802 million.

Full-year revenue rose 18 per cent annually to $2.67 billion, led by onshore and oilfield services businesses, as the company continues to support Adnoc’s push to expand crude production capacity to 5 million barrels per day by 2027.

Earnings before interest, tax, depreciation and amortisation (ebitda) for the 12-month period reached $1.23 billion, with an ebitda margin of more than 46 per cent, driven by cost efficiencies.

“These record results were enabled by our clear strategic objectives,” said Abdulrahman Al Seiari, chief executive of Adnoc Drilling.

Adnoc Drilling expects the strong earnings momentum to continue this year, with 2023 revenue estimated at between $3 billion and $3.2 billion, a 20 per cent annual increase, according to its first guidance for a coming year.

The company estimates ebitda to range between $1.35 billion and $1.5 billion, with an ebitda margin of 45 per cent to 47 per cent.

It also expects to post “a new record” net profit of $850 million to $1 billion in 2023, continuing the growth from $600 million in 2021 and $800 million in 2022.

Capital expenditure has been forecast at $1.3 billion to $1.75 billion this year.

“We are excited about the year ahead as we accelerate our business growth and build out our assets to enable Adnoc to realise its 2027 capacity targets,” Mr Al Seiari said.

Adnoc Drilling rapidly grew its operations last year, with its fleet expansion programme boosting the number of operational rigs.

It added 16 new drilling units in 2022, pushing the rig count to 115 and “charting a clear course for further expansion in 2023 and beyond”, Adnoc Drilling said.

Adnoc Drilling, which has provided integrated drilling services to Adnoc Onshore and Offshore operations since 2019, also received major contracts last year that boosted its project backlog.

These record results were enabled by our clear strategic objectives

Abdulrahman Al Seiari,
Adnoc Drilling chief executive

In November, it was awarded three framework agreements valued at $4 billion. It also secured a $980 million contract from Adnoc to hire two jack-up offshore rigs, associated manpower and equipment.

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

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

“I am particularly pleased with the over $10 billion of contract backlog we were awarded in the year by our long-term, highly supportive customers,” Mr Al Seiari said.

Adnoc is the company's majority shareholder, with an 84 per cent stake. Baker Hughes holds 5 per cent while US contract oil and gas driller Helmerich & Payne holds 1 per cent.

In light of the strong performance in 2022, the final dividend for 2022 is expected to increase by a minimum of 5 per cent, Adnoc said on Monday.