Adnoc Drilling efficiency drive targets recruitment

Adnoc L&S

• Rig fleet to expand by more than 50% over 18 months
• Number of new hires will rise by 30% to 35%
• Focus on staff reallocation and ‘smarter’ working

Recruitment plans by Adnoc Drilling are under review as the Abu Dhabi company strives to hit its efficiency targets.

A subsidiary of Abu Dhabi National Oil Company (Adnoc) and listed on the Abu Dhabi Exchange (ADX), Adnoc Drilling reported a 13 percent increase in revenues for the first half of the year as profits reached $446 million.

Included in the H1 results were operating costs of around $1.6 billion. Adnoc Drilling’s chief financial officer Esa Ikaheimonen told AGBI that efficiencies to tackle those expenses so far have saved “hundreds of millions of dollars”.

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But he revealed more is required as the company tries to meet its mid-term guidance of earnings before interest, taxation, depreciation and amortisation (Ebitda) of 50 percent.

“We’re at 47 percent today. It doesn’t sound like a quantum leap from there to 50, but the last percentage points are always the hardest to achieve,” he said.

Ikaheimonen said the “additional improvements” are in the region of 10 percent of total operating expenses and he hoped to reach that target within the next two years.

As part of that, he explained that the company will investigate more efficient ways of running its rigs, in particular manpower, which makes up 60 percent of Adnoc Drilling’s total operating expenses.

“We’ve got thousands of people working on our rigs so it’s quite obvious that if there’s any efficiency improvements or smarter ways of doing the work, that will immediately translate into savings,” Ikaheimonen said.

Adnoc Drilling’s listing in October 2021 was the largest in the history of the ADX and was 31 times oversubscribed.

At that time the company had just over 90 rigs in operation. This is due to rise to more than 140 in the next 18 months, increasing the fleet size by more than 50 percent.

However, rather than add a corresponding 50 percent to staffing levels, Ikaheimonen said: “We’ll probably end up employing 30 or 35 percent more and reallocate people from existing assets to new assets and bring new people and new hires to both new assets and old assets.

“In that mix there’s a great opportunity which doesn’t lead to net job losses, it just leads to a lower increase in us employing new people.”

Further efficiencies are to be identified through procurement and asset maintenance.

“It’s not about squeezing the dollars out of the stone, it’s about doing things differently,” said Ikaheimonen.

During the first half of 2023, Adnoc Drilling signed contracts worth over $2.4 billion, including a $2 billion offshore jack-up contract award and a $412 million integrated drilling services contract. 

The largest national driller for oil in the Middle East also signed sale and purchase agreements for two premium offshore jack-ups and 16 newbuild hybrid power land rigs.

“We’re going to have a really busy fourth quarter this year and then we’re going to have a really busy first half of next year,” said Ikaheimonen.

“By the middle of next year the programme is pretty much completed. We will have acquired about 40 additional rigs, which is probably a world record in the period of two-and-a-half years and we will have spent about $4 billion in doing that.”