Adnoc Drilling on track to exceed 2022 earnings with GCC expansion on course

Exclusive: The company aims to expand its operations beyond Abu Dhabi as it continues to add new rigs and expand its fleet, chief executive says

Adnoc Drilling currently has 116 rigs and aims to reach 142 by the end of next year. Photo: Adnoc
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Adnoc Drilling is on target to exceed its 2022 revenue and profit results this year and the company plans to expand its operations beyond Abu Dhabi to enter Saudi Arabia, Kuwait and Oman, according to its chief executive.

“With the programmes that we have on the rig deliveries, we are on target, and hopefully, we will achieve within the window that we have given of the guidance, they will be around the same figures,” Abdulrahman Al Seiari said in an interview with The National.

“We will have quarter-on-quarter slight improvements as we go towards the closing of the year because what we are planning [is] more rigs to come in, hopefully within this quarter and next quarter.”

According to its guidance issued earlier in the year, the largest national drilling company in the Middle East by rig fleet size expects revenue growth of $3 billion to $3.2 billion this year compared with the $2.67 billion in revenue in 2022, while its estimates a net profit of $850 million to $1 billion for 2023, against the $802 million recorded last year.

The company estimates earnings before interest, taxes, depreciation and amortisation (Ebitda) to range between $1.35 billion and $1.5 billion, with an Ebitda margin of 45 per cent to 47 per cent for the year.

Adnoc Drilling continues to expand its rig fleet to offer drilling services to its parent Adnoc as the state-owned company looks to boost its production capacity to 5 million barrels per day by 2027. Adnoc Drilling currently has 116 rigs, with an aim to reach 142 rigs by the end of next year.

In June, it signed an agreement to acquire two offshore jack-up rigs for $220 million as it expands its fleet. It also signed a deal in March to buy 10 newbuild hybrid power land drilling rigs for $252 million and another deal to acquire six hybrid power land rigs valued at $75 million in May.

“We have five jack-ups out in Singapore and China that are expected to come, within the coming two to three months … the demand is driven by the clients that we have, whether it is [Adnoc] onshore or offshore, to fulfil their production requirement, whether it is increasing their production or sustaining the production,” Mr Al Seiari said.

Adnoc Drilling is looking to expand its operations beyond Abu Dhabi with future plans to enter Gulf Co-operation Council country markets including Saudi Arabia, Kuwait and Oman.

“The plan is to go out and we are in the process of pre-qualification … that’s something which is going on. Once we are ready with the pre qualification, we will be working outside also,” Mr Al Seiari said.

There are opportunities to provide rigs as well as other services for both offshore and onshore oilfields in Saudi Arabia, Opec’s largest producer of crude, while in Kuwait and Oman, it is mainly for onshore fields, he added.

Saudi Arabia plans to increase oil production to more than 13 million bpd by the end of 2026 or the start of 2027, its Energy Minister said last year during an energy conference in Bahrain. It also announced the discovery of four new oil and gasfields in 2020.

Adnoc Drilling is adjusting its operations in line with the revised strategy of Adnoc to become net zero in emissions by 2045 instead of its previous target of 2050.

“We will adjust our plans to be on target for 2045. We have already awarded 16 land rigs. We call them hybrid because they have the capabilities of having the energy storage system … and also to be directly hooked up to the grid,” Mr Al Seiari said.

The hybrid power technology system stores energy in its batteries to use when there is a need for continuous power or to provide instant extra power when there is an increase in demand, reducing a rig’s greenhouse gas emissions by up to 15 per cent compared to a traditional rig.

Each of the rigs will have the provision to be connected to the electrical grid with minimum adjustment, depending on rig location and the availability of grid power, further reducing emissions, the company said previously.

It also plans to connect its camps, where its employees stay, to the grid rather than generating electricity through diesel generators at the camp, to cut emissions.

Adnoc Drilling employs about 10,000 people with 7,000 directly employed by the company.

Updated: August 08, 2023, 1:26 PM