Adnoc Drilling focuses on expansion outside UAE

Wam

• Regional market is ‘huge’
• Annual profit rises 29%
• Rig fleet up to 142 this year

Adnoc Drilling is seeking opportunities outside the UAE to increase its international presence, a senior executive has said.

The Abu Dhabi-listed company has started operations in Jordan, where it deployed one rig as part of a contract with the Jordanian government, according to Yussef Salem, their chief financial officer.

The company said recently it would explore opportunities in markets including Saudi Arabia, Oman and Kuwait.

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“We still have a substantial opportunity in the UAE which drives our growth, but the regional market is huge,” Salem said.

“There is competition, but opportunities offer a space for multiple players.”

Salem said that the company plans to increase its presence through organic growth and acquisitions.

Parent company Adnoc is also looking at further opportunities outside the UAE, with Bloomberg reporting on Wednesday that the state oil company has formed a joint venture with British oil and gas major BP to focus on natural gas projects in Egypt.

Adnoc Drilling this week reported a 29 percent year-on-year increase in net profit to $1 billion, supported by its fleet expansion strategy and accelerated growth of oilfield services.

The corporation achieved a 50 percent margin – the highest ever – in the last quarter of 2023.

It added 14 new drilling units last year, including four lease-to-own land rigs, taking its owned and operated fleet size to 129 rigs.

“We continue our fleet expansion to support Adnoc’s capacity target of 5 million barrels a day,” added Salem. “We will end 2024 with a total of 142 rigs, the contracts are already in place.”

Salem pointed out that the capital expenditure for the new rigs and oil services amounts to between $750 million and $950 million in 2024.

The integrated drilling services provider has also started to work with new hybrid rigs, capable of reducing emissions by up to 15 percent.

“With hybrid rigs, we support Adnoc in reaching the capacity target while achieving emission reduction.” A hybrid rig uses a diesel generator and battery for power generation.

The company has started to work on unconventional gas as well. “We have five rigs working on the unconventional site towards Adnoc Gas self-sufficiency and the UAE self-sufficiency target by 2030,” Salem added. 

Unconventional gas is natural gas trapped in tiny rock pores, often hard to reach. It can be unlocked by using innovative technology and hydraulic fracturing to bring it to the surface.

Adnoc Drilling recently formed a joint venture with Alpha Dhabi, with an allocated $1.5 billion investment in tech-enabled IP-owning oilfield services.

“These acquisitions in local business represent entry points for us,” said Salem.

“We closed our first investment in Gordon Technologies and will continue acquisitions and investments,” added Salem. “We expect to fully deploy this amount within three years, given the very attractive and advanced pipeline of transactions.”