ADNOC Drilling on fleet expansion spree as it eyes over $3bn revenue in 2023

Since its initial public offering in October 2021, the company has secured more than $12 billion in contract backlog. In April 2023, it won another contract for integrated drilling services worth $412 million. (Supplied)
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Updated 27 May 2023
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ADNOC Drilling on fleet expansion spree as it eyes over $3bn revenue in 2023

  • The company grew the fleet by 16 rigs in 2022, bringing the total to 115, CEO tells Arab News

RIYADH: On the back of a strong first-quarter performance, ADNOC Drilling plans to go big on its expansion strategy as it eyes 20 percent year-on-year growth in revenue this year. 

As a sole drilling partner to Abu Dhabi National Oil Co., ADNOC Drilling launched a bold fleet expansion program to enable the energy giant achieve its production targets. 

In an interview with Arab News, the CEO of the Middle East’s largest national drilling company, Abdulrahman Abdulla Al-Seiari, said they grew the fleet by 16 rigs in 2022, bringing the total to 115. 

“We will add a further 27 rigs by 2024, bringing our fleet to 142 rigs, and with these additional rigs will come additional revenue,” he told Arab News. 

Sharing the financial projections for the rest of the year, Al-Seiari said they expect to make a total revenue of between $3 and $3.2 billion in 2023. 

“We guided the market to expect EBITDA in the range of $1.35 to $1.5 billion with a margin of 45 percent to 47 percent. We will see record net income between $850 million and $1 billion,” he said. 

This comes after the drilling firm recorded a 19 percent year-on-year growth in revenue to $716 million in the first quarter.   

Its net income increased by 25 percent year-on-year to $219 million, which Al-Seiari said “clearly demonstrates the success of our strategy to expand both our drilling fleet and our service offering.” 

He attributed this rise in revenue to ADNOC’s accelerated production capacity growth which he said, “directly translates into an acceleration of drilling activity.” 

SPEEDREAD

• ADNOC Drilling said its OFS capabilities offer comprehensive drilling and completion services that span the entire drilling value chain.

• The business division has helped the firm create considerable savings in well time and cost while delivering better well economics, ensuring cost-effective services.

• The drilling firm looks to play a key role in helping ADNOC achieve its target of reducing carbon intensity by 25 percent by 2030.

“To enable this growth, we are growing our drilling fleet to deliver the wells required. When these rigs go onto our long-term contracts, they provide long-term cashflow and earnings visibility to shareholders while providing protection from market volatility,” he explained.   

ADNOC Drilling’s oilfield services business has also significantly grown in recent years and in the first quarter of 2022, the company achieved record OFS revenue of $123 million. 

Continuing that rapid expansion, the CEO said the segment grew by a massive 43 percent in the first quarter of 2023 to $126 million. The company attributed the growth to increased activity volume across the entire portfolio. 

ADNOC Drilling said its OFS capabilities offer comprehensive drilling and completion services that span the entire drilling value chain. 

The business division has helped the firm create considerable savings in well time and cost while delivering better well economics, ensuring cost-effective services. 

Talking about the growth prospect of the drilling industry, Al-Seiari said: “It is in very good shape in the UAE.” 

While ADNOC’s production capacity growth will deliver big gains for ADNOC Drilling in the short term, he said it plans to unlock Abu Dhabi’s “unconventional” oil and gas reserves and deliver gas self-sufficiency for the UAE that will “cement long-term earnings potential.” 

“We are the key enabler of gas self-sufficiency and will drill the thousands of wells needed to access the trillions of standard cubic feet of recoverable unconventional gas resources.”

Strong order book 

Since its initial public offering in October 2021, the company has secured more than $12 billion in contract backlog. In April 2023, it won another contract for integrated drilling services worth $412 million — the first of a number of anticipated significant awards in 2023.   

Talking about their future plans, Al-Seiari said they are “hugely ambitious” and are constantly evaluating opportunities for growth. 

“The pipeline of opportunities in Abu Dhabi is vast and remains our number one priority; however, the expansion of operations beyond our borders is a component of our mid-to-long-term strategy.” 

Decarbonization plan 

The drilling firm, which claims to have the world’s longest well with a total length of 50,000 feet, looks to play a key role in helping ADNOC achieve its target of reducing carbon intensity by 25 percent by 2030. 

“We are 100 percent committed to the delivery of maximum energy with minimum emissions,” said the CEO.    Explaining the company’s decarbonization plan, Al-Seiari said it rests on three broad streams of complementary activity which include continually driving greater efficiencies, minimizing the emissions of the drilling fleet, and addressing emissions associated with the global supply chain.   

“We are adding batteries to our fleet so providing hybrid power. These hybrid-powered drilling rigs can reduce emissions by up to 15 percent. Additionally, we are connecting our rigs to the grid where infrastructure allows,” he said. 

ADNOC Drilling is also supporting local manufacturing and procuring equipment and services from within the UAE — a move that helps the firm decarbonize its supply chain.


Saudi Arabia announces oil production cuts extension to the end of 2023

Updated 15 sec ago
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Saudi Arabia announces oil production cuts extension to the end of 2023

RIYADH: Saudi Arabia will continue the voluntary cut of one million barrels of oil per day starting November until the end of December 2023, the Ministry of Energy has announced.

The Kingdom's production for the final two months of the year will be approximately 9 million bpd.


Saudi Ports Authority rises in global maritime index Q3 report

Updated 03 October 2023
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Saudi Ports Authority rises in global maritime index Q3 report

RIYADH: Confirming the progressive trajectory of Saudi Arabia’s maritime sector, the Saudi Ports Authority, commonly known as Mawani, has jumped in the global maritime index for the third quarter of 2023.  

As outlined in a recent report from the UN Conference on Trade and Development, the data highlights a leap from 76.16 points in the second quarter to 77.66 points in the third quarter of the year, the Saudi Press Agency reported.

The uptick reflects Mawani’s commitment to strengthening the competitive capabilities of Saudi ports on the global stage, bolstering the maritime transport sector, enhancing networks, and refining logistics services.

Commenting on the achievement, Saleh Al-Jasser, Saudi minister of transport and logistics services and chairman of Mawani, emphasized that the Kingdom’s advancement is in alignment with the objectives of the National Strategy for Transport and Logistics Services.  

He also pointed to Mawani’s success in improving maritime shipping, with the introduction of 24 new services in 2023 alone.  

This move fortifies trade and export activities and strengthens the Kingdom’s connection to global markets through enhanced operational capabilities, maritime communication routes development, and an uplifted competitive stature.

The maritime network connectivity index, which gauges the interconnection levels of global ports with shipping line networks quarterly, incorporates several sub-indicators, including the scheduled ship visits to the country per week and the number of regular service routes offered by vessel lines to and from the national ports.

Earlier this year, Saudi Arabia celebrated climbing 17 global ranks in the Logistics Performance Index issued by the World Bank.  

On a separate ranking, the Kingdom’s ports rose to the 16th position in the UN Conference on Trade and Development’s Liner Shipping Connectivity Index in June.  

Moreover, Saudi Arabia achieved significant progress in the World Bank’s Logistics Performance Index, jumping 17 places to reach the 38th position in 2023.  

This marks a notable improvement compared to its rankings of 55 in 2018 and 52 in 2016.  

The Kingdom currently has 97 shipping links that connect to 348 international ports.


UAE’s ADNOC obtains global certification to supply sustainable aviation fuel 

Updated 03 October 2023
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UAE’s ADNOC obtains global certification to supply sustainable aviation fuel 

RIYADH: The UAE is all set to lead the Middle East in producing sustainable aviation fuel, with Abu Dhabi National Oil Co.’s Ruwais refinery receiving the International Sustainability and Carbon Certification. 

According to the Emirates News Agency, or WAM, the certification makes ADNOC the first company in the Middle East to supply the aviation sector with SAF and reinforces its sustainability pledge. 

The SAF is produced using cooking oils as feedstock and is blended with jet fuel at the Ruwais refinery. 

“Developing sustainable aviation fuel is an essential part of the company’s strategy to provide low-emission fuel to its customers,” said Sultan Albigishi, the acting CEO of ADNOC Refining, in a statement. 

Based in Cologne, ISCC is a global system for certifying the sustainability of agricultural, industrial, and food products. ISCC covers a wide range of products across multiple markets. 

By obtaining the international certificate for SAF production through its existing refineries, ADNOC can supply biofuel to international airlines in Abu Dhabi.  

According to WAM, the company will release its first batch of SAF later this month, which will be enough to fuel a 787-10 Dreamliner flight from Abu Dhabi to Paris. 

“Obtaining the international certificate for sustainability and carbon represents an important progress in ADNOC’s journey to achieve sustainability,” said Ahmad bin Thalith, the acting CEO of ADNOC Global Trading, in the statement. 

ADNOC Global Trading is responsible for providing vital raw materials suitable for refining operations. Trading operations include biofuels and other sustainable fuel alternatives to its global and local customers. 

The group continues to implement a qualitative shift and take practical steps to make today’s energy cleaner while investing in future clean energies to enhance its position as a reliable global energy provider. 

As part of its ongoing efforts to support the UAE’s strategic initiative to achieve climate neutrality by 2050, ADNOC recently announced that it will bring the date of attaining its climate neutrality goal closer to 2045 instead of 2050. 


Closing bell — Saudi main index drops 54 points to close at 10,952

Updated 03 October 2023
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Closing bell — Saudi main index drops 54 points to close at 10,952

RIYADH: Saudi Arabia’s Tadawul All Share Index continued its downward trend for the third consecutive day, as it shed 53.60 points or 0.49 percent to close at 10,952.34 on Tuesday.

The total trading turnover of the benchmark index was SR4.89 billion ($1.30 billion) as 74 stocks advanced, while 143 declined.

Saudi Arabia’s parallel market Nomu slipped on Tuesday, declining by 247.82 points to 22,544.21, while the MSCI Tadawul Index also fell by 0.44 percent to close at 1,407.13.

Alinma Tokio Marine Co. was the best-performing stock of the day on the main index. The company’s share price soared by 9.99 percent to SR15.20.

Other top firms include Middle East Healthcare Co. and Al Sagr Cooperative Insurance Co., whose share prices edged up by 4.92 percent and 3.69 percent, respectively.

Electrical Industries Co. was the poorest performer of the day, with its share price declining by 8.02 percent to SR1.95.

On the announcements front, Saudi Top for Trading Co., listed on the Kingdom’s parallel market, announced that it has signed a Shariah-compliant credit facility agreement with Riyad Bank worth SR30 million.

The newly-listed company said that SR20 million would be allocated to repay suppliers’ dues, while the remaining SR10 million will be used to issue letters of guarantee.

Meanwhile, Saudi multinational dairy firm Almarai said that its board has approved an investment plan of SR405 million to increase its fresh bakery capacity, expand its products, and enter the frozen bakery segment in the Kingdom.

According to a Tadawul statement, the new investment plan will be financed by Almarai’s internal cash flow, with an expected completion period of two years.


Bahrain’s economy grows 2% as non-oil sector expands

Updated 03 October 2023
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Bahrain’s economy grows 2% as non-oil sector expands

RIYADH: Bahrain recorded a 2 percent growth in real gross domestic product in the second quarter compared to the same period last year, according to its Ministry of Finance and National Economy. 

In its latest report, the department disclosed that the growth in real GDP was fuelled by a rise in the non-oil sector, also of 2 percent. 

The transportation and communication activities topped the rankings, reporting an annual growth of 13.3 percent in the second quarter, followed by hotels and restaurants, which grew by 9.6 percent. 

Real estate and business activities rose 4.9 percent, while financial corporations advanced by 4.7 percent annually over the second quarter of last year. 

The oil sector also reported an annual increase of 2.2 percent in business activity, spurred by a 2.9 percent rise in the combined production of Abu Sa’afa and the onshore Bahrain oil fields.   

Like many oil-dependent nations, Bahrain has recognized the need to diversify its economy.   

Various initiatives have been taken to support this, including in the financial services, tourism and hospitality, and real estate sectors.

The report further stated that the non-oil industry contributed 82.9 percent of Bahrain’s real GDP between April and June,

The financial sector made up the largest segment of the total, with its size reflecting the government’s focus on financial technology and digital banking.

The oil sector was the second-largest contributor to real GDP at 17.1 percent, while government services came in third, accounting for 14.1 percent.

The manufacturing sector dropped by 0.9 percent in the second quarter compared to last year’s corresponding period yet controlled 13.6 percent of the country’s real GDP. 

Bahrain has also been promoting the manufacturing and industrial sectors to reduce dependency on oil, including nurturing Aluminum Bahrain – one of the largest producers of the metal in the world – and growing the petrochemical industry. 

These diversification efforts align with Bahrain Economic Vision 2030, a comprehensive development plan to transform the country’s economy. 

The quarterly report further projects real GDP growth of 2.9 percent in 2023 and 3.2 percent in 2024, with the non-oil sector growing by 3.5 percent and 3.8 percent, respectively, during those years.