Adnoc Drilling delivers robust growth in third quarter with net profit up 36%

Inayat-ur-Rahman, Business Editor

Adnoc Drilling on Tuesday announced its financial results for the third quarter and first nine months of 2023. Third quarter revenue increased to $776 million, up 16% year-on-year with growth across all segments. Third quarter EBITDA increased by an impressive 27% year-on-year to $381 million as a result of strong top line growth and effective cost management initiatives, delivering an EBITDA margin of 49%.

Net profit for the quarter reached $257 million, up 36% year-on-year. For the first nine months of 2023, revenue grew 14% year-on-year to $2.2 billion, driven by increased activity and the expansion of Oilfield Services (OFS). During the same period net profit grew 24% year-on-year to $704 million and EBITDA grew 20% year-on-year to $1,058 million.

Abdulrahman Abdulla Al Seiari, Chief Executive Officer, Adnoc Drilling, commented: “Our positive third quarter results clearly demonstrate the effective execution of our comprehensive strategy to grow earnings by expanding our fleet and our service offering. These results demonstrate the Company’s ability to continue to deliver profitable growth as we maintain our safe, efficient and sustainable operations.

Long-term shareholder value creation remains central to our strategy and future development.” Adnoc Drilling’s sequential growth comes on the back of its two-pronged strategy of expanding its fleet and service offering. The Company now has a total fleet of 134 operational rigs. The accelerated fleet expansion since IPO underpins our growth targets, while boosting revenue as incoming rigs commence operations.

At the same time, OFS revenue reached $145 million in the third quarter 2023, up 41% year-on-year. Through OFS, ADNOC Drilling is delivering improved well delivery times and an associated emissions reduction, as a result of the adoption of advanced technologies and greater efficiencies.

Third quarter revenue grew 2% compared to the prior year, the overall increase inactivity more than offset the lower year-on-year recovery of fuel costs. • Offshore Jack-up: Third quarter revenue increased 39% year-on-year, mainly attributable to higher activity and lower major maintenance. First nine months revenue stood at $575 million, up 33% year-on-year.

Youssef Salem, Chief Financial Officer at Adnoc Drilling told Gulf Today that they have achieved remarkable growth since their IPO in October 2021, adding that their fleet expansion programme, designed to enable accelerated production capacity growth, is already having a positive impact on our earnings.

“This expansion, coupled with our focus on cost and the growth of our oilfield service business has all contributed to our ongoing success for the year.”

“Looking ahead, we expect work to unlock unconventional resources will be a growing part of our business as we play our part in delivering gas self-sufficiency for the UAE.”

“Expanding our business outside of Abu Dhabi and the UAE will also be a key area of focus for us in the long term and expanding our operations regionally and internationally is central to our strategy. We will mobilize our first rig to Jordan for an integrated drilling services campaign, building on track record of domestic growth and IDS capabilities.” He added.

“We have also entered into a joint venture with Alpha Dhabi Holding, a prominent UAE conglomerate with a proven track record of fueling business growth in diverse sectors.

This JV will see Adnoc Drilling and Alpha Dhabi acquiring technology-enabled companies in the oilfield services and energy sectors.

These acquisitions will not only boost our portfolio but will support us in providing even better service to our clients and will significantly reinforce our foothold as a leader in integrated drilling services.

He noted that the introduction of new rigs to our operational fleet coupled with the growth of our oilfield services business has seen revenues grow to $776 million, up 16% year-on-year, and net profits rising to $257 million, up 36% year-on-year.

In addition to expanding our fleet, we have also equipped our rigs with Integrated Drilling Services, which have greatly supported the growth of our OFS business delivering more than 646 IDS wells via 41 IDS rigs to date.

“Third quarter revenue of our oilfield services business grew 41% as compared to the prior year, while revenues for the first nine months of 2023 reached $405 million, up 44% year-on-year.”

“As a result, we are firmly on track to deliver on the updated financial guidance we issued at the start of the year to deliver revenues of between $3.0 - $3.2 billion for the full-year period with a targeted net income of between $0.9 – $1.0 billion.”

“We are implementing various initiatives aimed at either reducing or eliminating emissions in support of Adnoc’s target to decrease GHG intensity by 25% by 2030 and achieve Net Zero by 2045.

“We are also actively connecting our various central camps, that accommodate up to 5,000 employees, to Abu Dhabi’s power grid doing away with the need for diesel generators and associated emissions, while also progressively rolling out solar energy solutions across our mobile camps.” Salem concluded.