In 2020 ADNOC Drilling revenue was $2,097.9 million, up 1.8% from 2019, almost unaffected by the turmoil caused by the coronavirus pandemic. This noteworthy outcome is a perfect illustration of the quality of the contractual agreements with ADNOC and in particular of the downside protection provided by a 90% non-operating rate applying to rigs put on stand-by.
In addition to facing non-operating rate on some rigs, the company incurred a rise in Admin expenses primarily driven by Covid-19 associated costs, including accommodation of employees during quarantine, Covid-19 testing of employees and the purchase of relevant safety items such as masks and sanitizers. This however translated into a minor drop in 2020 EBITDA to $960 million from 1,015 million the year before. At 46%, the company’s EBITDA margin remained way above that of the industry.
ADNOC Drilling has adopted robust business continuity measures designed to best serve employees, customers and wider stakeholders across our business segments, and have fully adhered to Abu Dhabi’s Covid-19 protocols.
The company implementing a series of measures to aim to ensure the health and safety of employees while ensuring uninterrupted services to our customers. These measures included work-from-home arrangements for all management and support staff, social distancing and hygiene measures and awareness campaigns, arrangements for coronavirus testing across our sites, contact tracing and self-isolation arrangements as well as monitoring suppliers, subcontractors and partners. We also created country and customer-wide business continuity plans and return-to-work guides to support the new working arrangements. As of 30 April 2021, approximately 93% of our workforce received the first dose of a Covid-19 vaccine and 89% received the second dose of a Covid-19 vaccine. Additionally, we have ensured that office and site-based employees undergo regular weekly and bi-weekly Covid-19 PCR tests.
In recognition of the steps that the company has taken to implement processes which will provide continuity across all operations during disruptive events, ADNOC Drilling was awarded ISO 22301:2019 Security and Resilience – Business Continuity Management Systems certification, becoming one of the few drilling companies in the world to attain this international benchmark. The award is a testament to the fact that our organization operates to the highest international standards, and that we are well prepared to handle any disruption.
Based on the directive issued by the former Supreme Petroleum Council (now the Supreme Council for Financial and Economic Affairs), Supreme Council of National Security, and the National Emergency Crisis and Disaster Authority (NCEMA) to implement a Business Continuity Management (“BCM”) System, we created a BCM division, which reports to our general counsel who in turn reports to our CEO, and we developed policies, procedures and strategies to aim to ensure business continuity. We established a Resilience Committee chaired by our CEO to aim to ensure direct supervision and support of the management team for all BCM activities. In 2020, to enhance our BCM, we conducted a series of business impact analysis sessions with all operational and administrative functions, which allowed us to design and improve business continuity response and recovery strategies. As a result of these measures, we were able to remain in operation across all of our locations with minimal disruptions and the business continued to grow and improve its performance. [As of 30 June 2021, our operations and projects are fully functional.]
Our Onshore segment has not significantly been impacted by the coronavirus pandemic in terms of revenue and increased costs. The Onshore segment has experienced operational constraints such as issues around the work cycle of crews with the restrictions on travel, quarantine, testing and vaccination requirements delaying crew rotations, as well as the inability to engage third party suppliers due to restrictions and enhanced Covid-19 safety restrictions. However, this was offset by (i) the creation of skeleton crews and back up crew utilization, (ii) adopting a dynamic work cycle, (iii) the provision of new camps to solve for the inability to travel, and (iv) the facilitation of PCR testing and Covid-19 vaccination cycles for our crew members.
Our Offshore Jack up segment has not significantly been impacted by the coronavirus pandemic in terms of revenue and increased costs but has experienced operational constraints such as issues around the work cycle of crews with the restrictions on travel, quarantine, testing and vaccination requirements delaying crew rotations, as well as the inability to engage third party suppliers due to restrictions and enhanced Covid-19 safety restrictions. However, this was offset by (i) utilizing existing crews (which included skeleton crews) and crews from other rig sites as back up, (ii) rig stacking for some ‘non-critical’ projects to assist with crew shortages on other critical projects, (iii) placing a priority on crew welfare and safety by enhancing on-site accommodation, and providing Covid-19 vaccinations and PCR testing on sites and at our headquarters, and (iii) minimizing the requirement and usage of third parties with the use of in-house resources.
Our Offshore-Island segment was impacted by the coronavirus pandemic in terms of the stacking of certain assets. The Offshore-Island segment experienced operational constraints such as a large number of assets being stacked to comply with our customers’ revised production requirements. Quarantine requirements negatively impacted work cycles, and travel restrictions hindered the ability to manage third party operational support. However, this was offset by (i) the creation of skeleton crews and back up crew utilization, (ii) adopting a dynamic work cycle, (iii) the provision of new camps to solve for the inability to travel, and (iv) the facilitation of PCR testing and Covid-19 vaccination cycles for our crew members.
Our Oil Field Services (OFS) segment has not significantly been impacted by the coronavirus pandemic in terms of revenue and increased costs. The Oil Field Services segment has largely been operating as normal but has experienced operational constraints such as (i) quarantine restrictions and delays in recruitment due to the pandemic placing a strain on current resources, and (ii) the lock down of assets due to screening procedures and a number of Covid-19 cases. However, this was offset by (i) adjusting the field work cycle for all Oil Field Services personnel to adjust to travel guidelines, (ii) adopting a dynamic work cycle for enhanced operations, (iii) increasing dependence on the remote operations center in our headquarters to reduce the movement of people and avoid crew shortages, (iv) placing field breaks within camps to reduce the movement of people, (v) the facilitation of PCR testing and Covid-19 vaccinations for all crew members, and (v) minimizing the reliance on third parties, where applicable.