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 Company’s performance for the period is a continued reflection of our unwavering commitment to operational excellence and efficiency in every aspect of our business. Our achievements for the period are a testament to the relentless dedication of our people, whose efforts are central to delivering outstanding service to our customers and maximizing value for our shareholders.”
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, yileding 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
Following the delivery of an exceptional set of first half 2024 results the Board of Directors has approved an interim dividend of $394 million, +10% year-on-year under new enhanced and progressive dividend policy, equivalent to 9.0468 fils per share.
Highlights of the Second Quarter Ending June 30, 2024
| USD Millions | 2Q24 | 2Q23 | YoY% | 1Q24 | QoQ% | 1H24 | 1H23 | YoY% |
|---|---|---|---|---|---|---|---|---|
| Revenue | 935 | 724 | 29% | 886 | 6% | 1,821 | 1,440 | 26% |
| EBITDA | 472 | 344 | 37% | 437 | 8% | 909 | 677 | 34% |
| Net Profit | 295 | 228 | 29% | 275 | 7% | 570 | 446 | 28% |
| Earnings per share (USD/Share) | 0.018 | 0.014 | 29% | 0.017 | 7% | 0.036 | 0.028 | 28% |
| Capital Expenditure | (239) | (181) | 32% | (110) | 117% | (349) | (257) | 36% |
| Cash generated from operating activities | 518 | 395 | 31% | 347 | 49% | 865 | 621 | 39% |
Increase In FY2024 and Medium-Term Guidance Due to Exceptional 1H2024 Results
Moreover, driven by increased visibility on operations, earnings and profitability,
ADNOC Drilling updates its fiscal year 2024 and medium-term guidance. ADNOC Drilling’s updated full year 2024 financial guidance is presented below:
| USD Millions | FY2024 Previous Guidance | FY2024 New Guidance |
|---|---|---|
| Revenue | 3,600 - 3,800 | 3,700 - 3,850 |
| Onshore Revenue | 1,600 - 1,700 | 1,650 - 1,750 |
| Offshore Jack-up Revenue | 1,000 - 1,100 | 1,000 - 1,100 |
| Offshore Island Revenue | 200 - 250 | 200- 250 |
| Oilfield Services Revenue | 700 - 800 | 700 - 800 |
| EBITDA EBITDA Margin |
1,700 - 1,900 48% - 50% |
1,800 - 1,950 49% - 51% |
| Net Profit Net Profit Margin |
1,050 - 1,250 30% - 33% |
1,150 - 1,300 31% - 34% |
| CapEX Leverage Target |
750- 950 < 2.0x |
750- 950 < 2.0x |
ADNOC Drilling’s medium-term guidance is updated as follows:
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 signed a term sheet to enter a strategic partnership with Schlumberger Middle East SA (“SLB”) and Patterson-UTI International Holdings, Inc. (“Patterson-UTI”) subject to signing definitive agreements and any necessary regulatory approvals. The new company will be primarily engaged in unconventional drilling operations.
Record Institutional Placement of Shares Increased the Company’s Free Float by 50%
During the second quarter, ADNOC offered ADNOC Drilling shares through a bookbuild offering to professional investors in the UAE and institutional investors elsewhere. The successful $935 Million institutional placement constituted a sale of 880 million shares priced at AED 3.90, representing 5.5% of ADNOC Drilling’s total share capital, with ADNOC retaining a majority 78.5% stake.
The transaction witnessed strong investor demand and was largest-ever accelerated bookbuild of a publicly listed company in the UAE. The successful offering increased ADNOC Drilling’s free float by 50%, enhancing liquidity and providing a pathway for broader indexation.
Shareholders Approve New Enhanced Dividend Policy
At its General Shareholder Meeting held on 24 June 2024, ADNOC Drilling shareholders approved a progressive dividend policy that will see dividends grow by at least 10% per annum on a dividend per share basis over the next five years (2024-2028).
The Board of Directors, at its discretion, may approve additional dividends over and above the policy after considering free cash flow and accretive growth opportunities.
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%, subject to regulatory approvals. Gordon Technologies is a market leading provider of technology focused primarily on measurement while drilling.
Subsequently and subject to regulatory approvals, 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. The transaction completion remains subject to necessary regulatory approvals and closing adjustments, after which the NTS stake will be formally transferred to Enersol.
In July, Enersol also agreed to acquire a 100% equity stake in EV Holdings Ltd, subject to regulatory approvals. 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 Activity Subsequent to the End of the Second Quarter
ADNOC Drilling was awarded a $733 million contract for three newbuild island rigs.
The contract is above medium-term guidance with accretive dayrates enhancing longterm 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.
Release Details
August 05, 2024
Abu Dhabi, UAE