ADNOC Drilling Confirms $2 Billion Contract Award to Enable Delivery of Ghasha Mega-Project
Significant contracts valued at $1.3 billion for Integrated Drilling Services (IDS) and $700 million for Island Drilling Units
Substantial IDS award accelerates revenue growth and further cements ADNOC Drilling’s position as the Middle-East’s leader in Oilfield Services (OFS)
IDS award will add a further $40 million per year to the Company’s previously disclosed Oilfield Services revenue guidance
Contract award reinforces strategic value of ADNOC Drilling’s unique position as an enabler of ADNOC’s plans of realizing gas self-sufficiency for the UAE
ADNOC Drilling Company PJSC (“ADNOC Drilling” or “the Company”) (ADX symbol: ADNOCDRILL / ISIN: AEA007301012) today confirmed the award of contracts worth $2 billion to enable the delivery of ADNOC’s Ghasha offshore mega gas project.
The contracts are valued at $1.3 billion for Integrated Drilling Services (“IDS”), and $700 million for the provision of four island drilling units, supporting acceleration of ADNOC Drilling’s medium-term revenue and earnings growth at very attractive margins. Each contract has a fixed term of ten years, with the IDS portion of the award adding $40 million per year to the Company’s previous Oilfield Services revenue guidance.
The Ghasha project is the world’s largest offshore sour gas development and plays a key role in ADNOC’s plans to meet growing domestic and international demand for gas, as well as enabling gas self-sufficiency for the UAE. Production from the concession is expected to start around 2025, ramping up to produce more than 1.5 billion standard cubic feet per day before the end of the decade.
ADNOC Drilling’s 50 years of experience and robust delivery track record, including pioneering work with drilling from artificial islands, make the Company the natural partner to ADNOC in the development of this essential project. Up to 46 wells can be drilled from a single artificial island, significantly minimising the project’s environmental footprint.
The awards reinforce ADNOC Drilling’s unique role as the sole provider of drilling services to ADNOC.
Abdulrahman Abdullah Al Seiari, Chief Executive Officer of ADNOC Drilling, commented: “This world-class award is testament to ADNOC Drilling’s position as the Middle East’s largest regional drilling company and the regional leader in Oilfield Services. It will ensure we continuously deliver strong and sustained growth while further driving shareholder value. Our status as a key enabler of ADNOC’s production capacity expansion targets offers investors a solid opportunity for sustained and predictable revenue growth, coupled with market leading cash flows and profitability margins, resulting in a progressive dividend policy.
“The $1.3 billion IDS contract also highlights the growing impact of our innovative strategy for offering our customers start-to-finish wells and fortifies our differentiated position as a world leader in drilling and completion services.”
Since ADNOC Drilling launched its IDS offering in 2018, the Company has delivered more than $250 million in savings for its customers through the delivery of start-to-finish wells. Drilling and completion services are a crucial link in ADNOC Drilling’s strategy to maximize value from every well, while minimizing its environmental footprint.
Already a market leader in the region, ADNOC Drilling is committed to expanding its offering to further capitalize on market opportunities. The Company plans to double its delivery of IDS wells in 2022, and double its IDS-capable fleet by 2024, which will support the doubling of OFS revenues by 2025. The Ghasha award accelerates the Company’s ability to achieve and exceed those targets.
Following an initial public offering in October 2021, ADNOC Drilling has demonstrated strong and resilient growth. In the first quarter of 2022 the Company delivered revenue of $601 million, a 15% year-on-year increase, leading to a 59% increase in net income to $175 million.