ADNOC Drilling Company has unveiled a new, progressive dividends policy for the next five years which will see at least 10 percent annual growth on a per-share basis.
The expected cumulative minimum yield from the new policy in the period 2024-2028 is more than 27 percent, based on a closing price of AED4.03 on the Abu Dhabi Securities Exchange (ADX) on June 24.
Additional dividends over and above the progressive dividend policy may be approved by the Board of Directors during the period, depending on free cash flow accretive growth opportunities.
On May 23, ADNOC completed a $935 million institutional placement of ADNOC Drilling shares, representing 5.5 percent of the company’s total issued and outstanding share capital. That increased the free float to 16.5 percent, enhancing liquidity for the investors.
The higher free float resulted in a higher weight in FTSE indices and is expected to provide a pathway towards inclusion in the Morgan Stanley Capital International (MSCI) Emerging Market Index, subject to the company meeting the relevant inclusion criteria.
Abdulmunim Saif Al Kindy, ADNOC Upstream Executive Director and Vice Chairman of ADNOC Drilling, commented: “The approval of this enhanced dividend policy reflects ADNOC Drilling’s commitment to delivering increasing value to shareholders, enabled by an accelerated and multi-faceted growth strategy that embraces artificial intelligence, digitisation, and advanced technologies both in the UAE and internationally.
“ADNOC’s recent placement of an additional 5.5 percent of ADNOC Drilling’s share capital means there is now a greater number of shareholders to benefit from these enhanced returns.”
Dividends are expected to be paid semi-annually with a final dividend distributed to shareholders in the first half, and the payment of the interim dividend in the second half of each fiscal year.
ADNOC Drilling’s strategy is focused on the expansion of its fleet and the development of integrated drilling services to enable ADNOC’s production capacity growth.
It recently established a new company – Turnwell – to focus on opportunities in unconventional resources, including an initial contract to deliver 144 wells and the potential for thousands more over time which are incremental to the current growth guidance.
Through its strategic joint venture Enersol (with Alpha Dhabi), ADNOC Drilling aims to acquire and invest in global energy technologies. Enersol recently acquired a 67.2 percent controlling stake in Gordon Technologies, the closing of which is subject to customary regulatory approval.
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