ADNOC Drilling Company (ADNOC Drilling) posted record first-quarter revenue of $880 million, up 24 percent year-on-year, and EBITDA of $437 million, up 31 percent. Net profit for the quarter reached $275 million, up 26 percent YoY.
The company exceeded market expectations for the third quarter in a row, driven by revenue growth in its Offshore Jack-up and Oilfield Services (OFS) segments, which increased 51 percent and 16 percent respectively YoY.
Increased onshore activity, driven by the contribution from new rigs commencing operations drove onshore revenue for the quarter to $411 million. Offshore Jack-up revenue was at $278 million, mainly due to higher activity from the additional jack-up rigs contributing revenue.
New dividend policy
In line with the strong performance, the board has introduced a new, progressive dividend policy for the next five years. Dividends are expected to grow by at least 10 percent per annum on a dividend per share basis over the next five years (2024-2028).
The Board of Directors, at its discretion, may consider additional dividends over and above the progressive dividend policy after taking into account growth opportunities while maintaining net debt/EBITDA up to 2x, excluding transformative M&A.
Abdulrahman Abdulla Al Seiari, Chief Executive Officer, ADNOC Drilling, commented: “Our strong first quarter performance demonstrates that we have entered a new era for the company as we go from strength-to-strength, delivering on and beyond the expectations of the market, our customers and our shareholders.
“Confidence in our growth trajectory and cash flow generation ability going forward, has resulted in our Board of Directors recommending an enhanced progressive dividend policy that will further bolster shareholder returns.”
During the quarter, ADNOC Drilling was awarded a $1.7 billion contract to provide drilling and associated services for the recovery of unconventional energy resources. The contract will see the company deliver 144 unconventional oil and gas wells. ADNOC Drilling will leverage the technology pipeline of its strategic joint venture Enersol and its AI, digitisation, and advanced technologies to contribute to responsible energy delivery.
Al Seiari called it a “transformational opportunity” for the company.
“Our multi-faceted strategy of enabling ADNOC’s conventional and unconventional production capacity growth to meet the world’s growing demand for energy will further transform the business in 2024-onwards,” added Al Seiari.
“The $1.7 billion contract award represents a transformational opportunity as the UAE’s world-class unconventional energy resources will require many thousands of wells and we are in prime position to deliver them. Aligned to this is the investment in, and adoption of, artificial intelligence and advanced technologies through our strategic joint venture, Enersol, which has a $1.5 billion mandate to invest in and acquire global energy technologies.”
ADNOC Drilling’s fleet expansion
ADNOC Drilling’s fleet, at the end of first quarter, stood 137 rigs – 133 owned, and four lease-to-own land rigs. This is an increase of 22 rigs year-on-year.
Thirteen of the company’s rigs are hybrid-powered land rigs that utilise battery storage to improve power delivery and reduce emissions by up to 15 percent per rig. An additional three hybrid land rigs are expected to enter the fleet this year.
The company reported a fleet availability rate of 97 percent for the quarter ending 31 March.
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