Adnoc awards $1.94 billion framework accords to enable drilling growth

Abu Dhabi National Oil Company (Adnoc) on Thursday announced framework agreement awards valued at $1.94 billion (Dhs7.1 billion) to enable drilling growth. The awards build on Adnoc’s recent record investments in drilling-related equipment and services and support its strategy to boost crude oil production capacity to 5 million barrels per day (mmbpd) by 2030 and drive gas self-sufficiency for the UAE.

The framework agreements for wireline logging and perforation services are the largest of such awards in the oil and gas industry and were awarded to Adnoc Drilling Company (Adnoc Drilling), Schlumberger Middle East (Schlumberger), Haliburton Worldwide Limited Abu Dhabi (Halliburton) and Weatherford Bin Hamoodah Company (Weatherford), following a competitive tender process.

Wireline logging involves continuously measuring the properties of rock formations to guide drilling operations while perforation creates tunnels in the wellbore to allow fluid to flow in from the reservoir.

Dr. Sultan bin Ahmed Al Jaber, Minister of Industry and Advanced Technology, and Managing Director and Group CEO of Adnoc, said, “The framework agreements announced today are a continuation of Adnoc’s unprecedented investment in services to enable the expansion of drilling activity required to responsibly unlock the UAE’s leading low-cost and low-carbon intensity oil as well as the nation’s gas resources. Not only do these awards support our 2030 strategy, they are expected to deliver over 80 per cent of In-Country Value to the UAE and align with the UAE’s ‘Principles of the 50’ economic blueprint for sustainable growth.”

The framework agreement awards cover Adnoc’s onshore and offshore fields and will run for five years with an option for a further two years. Furthermore, skilled employment opportunities will be created for UAE nationals by the successful companies who will also work to identify local manufacturing opportunities.

Adnoc Drilling’s share of the awards is the largest and it covers services including cased hole and open hole as well as perforation. This reflects the company’s expanded service profile as a result of its transformation into a fully Integrated Drilling Services (IDS) company following the award to Baker Hughes of a 5% share in the company in 2018.

Yaser Saeed Almazrouei, Adnoc Upstream Executive Director, said, “The award to Adnoc Drilling demonstrates its robust offering and capabilities as well as its integral role in Adnoc’s future drilling activities. The awards to all four companies will deliver substantial in-country value, and create new job opportunities for UAE nationals, in line with the Leadership’s wise directives.” The framework agreement awards will support Adnoc’s requirement to drill thousands of new wells to expand its production capacity and remain a leading low-cost, low-carbon oil producer.

The awards will also enable hundreds of millions of dollars in cost savings.

As an integral part of its 2030 strategy, Adnoc is optimising its procurement strategy to reflect market dynamics, focusing on long-term contracts with an optimised number of suppliers that provide stable and reliable delivery at highly competitive rates. In November 2021, Adnoc announced investments of almost $6 billion (Dhs22 billion) in the form of procurement awards to top-tier contractors for Wellheads and related components, Downhole Completion Equipment (DCE) and related services, and Liner Hangers and Cementing Accessories.

Meanwhile the Adnoc Drilling Company announced its financial results for the fourth quarter and full-year ending Dec.31, 2021, with a net profit for the full year $604 million, up 6 per cent year-on-year.

A press release by Adnoc Drilling said that the Company’s revenue for the 12 months increased 8.2 per cent to $2.27 billion compared to the same period last year. Year-on-year revenue growth was led by the Onshore segment, as the Company continues to support Adnoc Group’s programme to grow production capacity significantly.

The Company’s Oilfield Services (OFS) segment also considerably increased revenue and Ebitda year-on-year.

Full-year Ebitda was $1.047 billion, with a margin of 46.1percent, as the Company made excellent progress on delivering further cost efficiencies. Year-on-year, Q4, 2021 Ebitda grew by 2.7 per cent. Over the period, Ebitda margin expanded to 45.6 per cent, reflecting, in part, active management of centrally allocated expenses in the quarter.

Year-on-year underlying operating performance was stable. Revenue growth was strongest in OFS, helping offset weaker Q4, 2021 revenues in drilling segments, leaving Q4, 2021 revenues essentially flat vs Q4, 2020. Financial performance was lower due to non-recurring drilling revenues booked in the prior comparative year.

WAM