Adnoc raises $935m in latest drilling unit share sale

Offering recorded strong demand from global and GCC institutional investors

Adnoc will retain a majority stake in its drilling unit after selling additional shares in the company to institutional investors. Photo: Adnoc

Adnoc raised $935 million by selling 880 million additional shares in its drilling unit to institutional investors after recording strong demand for the offering.

The share sale representing 5.5 per cent of Adnoc Drilling’s total issued share capital registered robust demand from investors in the GCC and globally, the company said in a statement on Thursday to the Abu Dhabi Securities Exchange, where its shares are traded.

The shares were sold for Dh3.90 ($1.06) each, nearly 70 per cent above the initial public offering price of Dh2.30 per share and a 5.6 per cent discount to the company’s closing price on Wednesday.

The company's shares were trading 3.87 per cent higher at Dh4.29 per share at 11.30am UAE time on Thursday, after closing at Dh4.13 the previous day.

The latest offering will increase Adnoc Drilling’s free float to 16.5 per cent, with its parent retaining a majority stake in the company.

A higher free float is expected to help Adnoc Drilling to be included in the Morgan Stanley Capital International Emerging Market Index.

The MSCI Emerging Markets Index is a broad index that includes a large number of stocks from 24 emerging market countries, covering about 85 per cent of the total market capitalisation of these countries.

EFG Hermes UAE, First Abu Dhabi Bank, Goldman Sachs International and JP Morgan Securities acted as joint global co-ordinators and joint bookrunners on the new offering from the company.

This additional stake sale is taking place more than two years after Adnoc raised $1.1 billion from an IPO of its drilling unit.

“The significant interest our offering generated from both domestic and international investors is testament to Adnoc Drilling’s growth trajectory since its IPO and its exciting future growth potential,” Khaled Al Zaabi, group chief financial officer of Adnoc, said.

Adnoc Drilling, the largest national drilling company in the Middle East by rig fleet size, reported a 26 per cent increase in its first-quarter profit last week.

It also said at that time that it was awarded a $1.7 billion contract by Adnoc to provide drilling services for the recovery of unconventional oil and gas resources.

The Adnoc subsidiary has set up a company called Turnwell Industries, which will fulfil the contract and explore potential future opportunities in unconventional resources, the company said.

Adnoc, responsible for most of the UAE's crude production, is working to develop its unconventional reserves as it looks to reach an output capacity of five million barrels per day by 2027. It can already produce up to 4.85 million bpd.