Adnoc Drilling awarded $412m contract for development of Upper Zakum oilfield

Five-year contract will take effect in the second quarter of this year

The Upper Zakum field, the largest producing field in Adnoc's portfolio, is the second-largest offshore oilfield and fourth-largest oilfield in the world. Photo: Adnoc

Adnoc Drilling, the largest national drilling company in the Middle East by rig fleet size, has secured a $412 million contract to provide integrated drilling services for the development of the Upper Zakum oilfield in Abu Dhabi.

The five-year contract was awarded by Adnoc Offshore and will start in the second quarter of 2023, Adnoc Drilling said on Thursday to the Abu Dhabi Securities Exchange, where its shares are traded.

The Upper Zakum field, the largest producing field in Adnoc's portfolio, is the second-largest offshore oilfield and fourth-largest oilfield in the world.

The contract will contribute to the "effective development of the Upper Zakum field and enable Adnoc to realise accelerated production capacity targets to responsibly supply energy to a world which sees continuously rising demand", said Abdulrahman Al Seiari, chief executive of Adnoc Drilling.

"This contract award further demonstrates the delivery of our strategic objective to expand our oilfield services (OFS) business as we continue to work towards our goal of further doubling OFS revenues by 2025. This contract alone will add some 20 per cent to our annual revenue compared with 2022."

The company's oilfield services unit posted $405 million in revenue last year, an increase of 23 per cent over 2021. It expects the division to generate revenue of between $500 million and $550 million in 2023, it previously said.

Adnoc Drilling reported a 61 per cent increase in its fourth-quarter net income as revenue hit a record during efforts to support its parent in boosting production capacity.

Net profit for the three months to the end of December climbed to $234 million, while revenue 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.

Last year, Adnoc Drilling won a $1.3 billion award for the Ghasha project, which is part of the mega Ghasha concession, the world’s largest offshore sour-gas development.

The company was also awarded a $1.6 billion contract for integrated drilling fluid services and a $777 million deal for wireline and perforation services last year.

Adnoc Drilling has also forged partnerships to boost its portfolio.

In March, it signed an agreement to purchase 10 newbuild hybrid power land drilling rigs for $252 million as part of its decarbonisation strategy.

The rigs, built by China Petroleum Technology and Development Corporation, will progressively enter the company's fleet from the fourth quarter of 2023, with a partial revenue and earnings before interest, tax, depreciation and amortisation contribution from 2024, the company said.

Adnoc Drilling also signed a five-year preliminary agreement with Abu Dhabi’s clean energy company Masdar last month to explore partnerships and investments in geothermal energy.

The companies will assess potential co-operation in areas such as development, investment, operations and projects to promote the energy transition in the UAE and other markets, Adnoc Drilling said.