Adnoc’s global expansion through the creation of ventures will present opportunities for its subsidiary, Adnoc Drilling, which is looking for oil drilling tenders in Kuwait and Oman, a senior executive said.
Adnoc, responsible for most of the UAE’s oil production, is boosting its international presence and recently announced the launch of XRG, a lower-carbon energy and chemicals investment unit, with an enterprise value of more than $80 billion.
Last month, oil major BP and XRG announced the completion of a joint venture named Arcius Energy, which will initially focus on gas assets in Egypt.
“All of these ambitious international operations of Adnoc, by definition, [will] open for us a lot of doors,” Youssef Salem, the chief financial officer of Adnoc Drilling told The National.
Adnoc Drilling, which is looking to expand in the Middle East, is seeking contracts for drilling and oilfield services in Kuwait and Oman.
“The idea, over time, is to try to build a position similar to what we have in Abu Dhabi in terms of integration,” Mr Salem said.
The drilling business requires longer pre-qualification processes in each country, whereas service operations allow the company to be “more agile” and quickly respond to attractive tenders, he said.
Last year, Adnoc Drilling was earmarked for inclusion on Kuwait Oil Company’s list of approved contractors.
Kuwait, Opec’s fifth-largest producer, aims to increase its crude oil production to four million bpd by 2035 from about 2.4 million bpd.
National oil companies in the Middle East are set to increase oil and gas output in the coming years, betting on demand in developing economies.
Adnoc Drilling will “achieve or exceed” its profit guidance for 2024 when it reports results in mid-February, Mr Salem said.
In October, the company raised the lower limit for its annual net profit to between $1.2 billion and $1.3 billion, compared with the earlier range of $1.15 billion to $1.3 billion.
Adnoc Drilling's fourth-quarter revenue will reflect the initial earnings generated by its newly formed joint ventures, Turnwell and Enersol, Mr Salem said, adding that these ventures will position Adnoc Drilling for a strong 2025.
Last year, Adnoc Drilling, Schlumberger, and Patterson-UTI formed Turnwell, which will focus on the UAE's unconventional oil and gas programme.
Adnoc Drilling also teamed up with Alpha Dhabi Holding to launch Enersol, a tech-focused joint venture, in January last year. The company aims to invest $1.5 billion in technology-driven firms in the oilfield services sector by the end of 2025.
Enersol spent $750 million to $800 million on acquisitions last year and plans to follow a similar strategy this year, Mr Salem said.
“We have a very healthy pipeline. If you look at last year, [the acquisitions] were a majority in North America, and then kind of minority in Europe and the Middle East, so we're looking again at a very similar pipeline for this year,” he added.
Meanwhile, Turnwell is focused on the Abu Dhabi market due to the scale of projects and the opportunity to build a strong track record of successful operations, Mr Salem said.
Turnwell is currently drilling 144 unconventional oil and gas wells as part of a $1.7 billion contract awarded by Adnoc in May. The programme is “on track” to be completed between the end of 2025 and mid-2026, Mr Salem said.
By completing wells faster, the company can reduce costs, increase profit margins, and redeploy rigs to the next well more quickly, he added.
Adnoc Drilling has a contracted backlog of six rigs for this year and next, which will bring the company’s total to 148 rigs. It also plans to add two to three uncontracted rigs annually as part of its regular operations.
