Adnoc Drilling will focus more on the UAE’s unconventional oil and gas resources this year as parent company Adnoc pushes to boost its production capacity to five million barrels per day by 2027, according to its chief executive.
“We have been doing unconventional for the last five years but not to the depth which will potentially [be seen] in the coming months and the years to come,” Abdulrahman Al Seiari told The National.
“It's an area that is [a] big focus for today … because [it] is going to be one of the main additional sources for oil and gas [in the future].”
Abu Dhabi’s unconventional recoverable oil resources are estimated at 22 billion barrels of very light and sweet crude, comparable to Adnoc’s flagship lower-carbon Murban grade.
These independently verified resources have production potential comparable to the most prolific North American unconventional plays.
Mr Al Seiari said that Adnoc Drilling, the largest national drilling company in the Middle East by rig fleet size, will be able to expand its fleet to 142 rigs by 2023 or early 2024, earlier than a previous timeline of late 2024.
The company currently operates 115 rigs.
Last month, Adnoc Drilling signed an agreement to buy 10 newbuild hybrid power land drilling rigs for $252 million as part of its decarbonisation strategy.
The rigs will progressively enter the company's fleet from the fourth quarter of this year, with a partial revenue and earnings before interest, taxes, depreciation and amortisation contribution from 2024.
Adnoc Drilling, which is in the process of finalising another 10 hybrid rigs for its fleet, is willing to invest in new proven technologies as long as they are the right fit, Mr Al Seiari said.
Meanwhile, the company is in the early stages of expanding its operations in the broader GCC region.
“It’s just a matter of time because processes have to be addressed and if certain companies have processes of pre-qualification, [we] will need those things to work through,” Mr Al Seiari said.
“Some of our team members are in different countries in the GCC attending meetings [and] responding to whatever is being asked, so it is on our radar.”
A potential foray into the Gulf region will come amid increasing oil price volatility.
Brent, the benchmark for two thirds of the world’s oil, soared to nearly $140 a barrel last year following Russia’s invasion of Ukraine. It is now trading below $80 a barrel as concerns of a recession outweigh tight supply in the market.
“The way we've been built; we're not focused on what's happening with the oil price. What we're working on is plans [and] capabilities,” Mr Al Seiari said.
“We [have] had so many cycles in the oil industry, but what we've been doing is just continuously developing and wrapping up capabilities.”
Adnoc Drilling, which provides integrated drilling services to sister companies Adnoc Onshore and Adnoc Offshore, reported a 25 per cent rise in first-quarter net profit, as the addition of new land rigs into the fleet boosted revenue.
Net income for the three months ended March 30 rose to $218.6 million, from $174.4 million in the same period last year, the company said last week in a filing to the Abu Dhabi Securities Exchange, where its shares are traded.
Revenue during the reporting period rose by 19 per cent to $716 million mainly due to new land rigs entering the operational fleet in the second half of 2022.