ADNOC Drilling achieves “record” Q2 results on high onshore, offshore rig activity
(WO) – ADNOC Drilling Company PJSC announced record financial results for the second quarter and first half of 2024.
ADNOC Drilling’s second quarter and first half 2024 revenue increased to $935 million and more than $1.8 billion, up year-on-year by 29% and 26%, respectively. This growth has been driven by the expansion of operations across all business segments.
The strong top-line translated into record EBITDA both in the quarter and the first half. Second quarter EBITDA increased by 37% year-on-year and 8% sequentially to $472 million, yielding a 50% EBITDA margin.
First half EBITDA was $909 million, up 34% year-on-year and with a margin increase to 50%, driven by strong revenue growth, coupled with the company’s continued and effective cost management initiatives.
Net profit for the quarter also grew, up 29% year-on-year and 7% sequentially to $295 million, driven by the increase in EBITDA, while for the first half the figure stood at $570 million, up 28% year-on-year.
At the end of the second quarter, the fleet consisted of 140 rigs (136 owned plus four lease-to-own land rigs), up from 137 at the end of the first quarter due to the addition of three land rigs.
Q2 highlights
Onshore. Revenue in the second quarter increased 27% year-on-year to $441 million from $346 million, mainly due to new rigs put into operations.
Offshore jack-up. Revenue for the quarter increased 48% year-on-year to $284 million from $192 million, due to higher activity from jack-ups gradually contributing to revenue in the last few quarters.
Offshore island. Revenue increased 2% year-on-year to $53 million from $52 million, mainly driven by a rig reactivation during the second quarter.
Oil field services (OFS). Revenue increased 17% year-on-year in the second quarter to $157 million from $134 million, mainly driven by increased activity in drilling fluids and wireline services. The overall volume of activity of the segment is expected to increase throughout the year, in-line with planned phasing and driven by IDS rigs ramp-up and unconventionals.
Transformational unconventional energy contract award. In May 2024, ADNOC awarded ADNOC Drilling a transformational $1.7 billion contract award to unlock the UAE’s world-class unconventional energy resources.
To service the contract, and explore the considerable future opportunities in unconventional resources, ADNOC Drilling incorporated a new company, Turnwell Industries LLC OPC (“Turnwell”).
ADNOC Drilling has also signed a term sheet to enter a strategic partnership with Schlumberger Middle East SA (“SLB”) and Patterson-UTI International Holdings, Inc. (“Patterson-UTI”). The new company will be primarily engaged in unconventional drilling operations.
Enersol acquisitions gain momentum. Enersol, a strategic joint venture between ADNOC Drilling and Alpha Dhabi, completed its second transaction in the second quarter of 2024, which saw it increase its equity stake in Gordon Technologies to 67.2%. Gordon Technologies is a provider of technology focused primarily on measurement while drilling.
Enersol in July 2024 signed an agreement to acquire a 51% stake in NTS Amega, a leading global provider of advanced manufacturing of precision equipment, complex tool repair and rental solutions for the energy sector.
In July, Enersol also agreed to acquire a 100% equity stake in EV Holdings Ltd. Headquartered in the United States, EV is a leading global provider of vision-based diagnostics and analytics services for the oil and gas sector. The company has a global footprint with a presence in 36 countries, including the UAE and Saudi Arabia.
Looking ahead, ADNOC Drilling is well-positioned to benefit from Enersol’s AI, digitization, and advanced technology acquisitions. This will provide the company increased access to advanced technology and intellectual property as well as offer an additional avenue for generating accretive returns to shareholders.
Further Q2 activity. ADNOC Drilling was awarded a $733 million contract for three newbuild island rigs. The contract is above medium-term guidance with accretive dayrates enhancing long-term contracted cash flow and earnings visibility.
ADNOC Drilling and Honghua Group will collaborate to integrate artificial intelligence in rig design improving safety and efficiency. The ADNOC Drilling fleet is now expected to total at least 148 by 2026 including these three new rigs as well as the previously announced three land rigs for the initial phase of the unconventionals development.
ADNOC Drilling’s AD-137 land rig has been operating in the Kingdom of Jordan since the fourth quarter 2023. In July 2024, the company received an extension to the current contract that will see the rig deliver further wells and stay in Jordan to at least the end of 2024.
Additionally, ADNOC Drilling has been pre-qualified by the Kuwait Oil Company (KOC) to be included in KOC’s approved contractors list for provision of drilling, rig and ancillary services. This significant news supports the company’s ambitions to expand its drilling and OFS activities internationally and opens the door to expand activities into Kuwait.
