Abu Dhabi’s ADNOC Drilling approves $341m dividend

Shareholders of ADNOC Drilling, the Middle East region’s largest national drilling company by rig fleet size, have approved a record dividend of 7.83 fils per share or $341m for the second half of 2022.

The shareholders’ approval brings the total full-year 2022 dividend to 15.67 fils per share or $682.5m, a 5 per cent year-on-year increase from 2021 levels.

The company said it is committed to a progressive dividend policy, reflecting robust underlying cash flow, with an annual distribution that is expected to grow by as much as 5 per cent per annum on a dividend per share basis over the next four years.

ADNOC Drilling, the drilling business of ADNOC Group, said its full-year net profit surged by 33 per cent to $802m in 2022 driven by new rigs entering the operational fleet and robust growth in its onshore and oilfield services businesses.

Read: ADNOC Drilling reports $802m net profit in 2022, reflecting a 33% YoY rise

The drilling company’s revenues jumped 18 per cent to $2.67bn million, led by its onshore and oilfield services segments as the company accelerated ADNOC’s production capacity target of five million barrels per day (bpd) by 2027.

The Abu Dhabi-based firm’s earnings before interests, taxes, depreciation and amortisation (EBITDA) reached $1.2bn in 2022, with a margin of over 46 per cent, bolstering progress on the delivery of further cost efficiencies.

ADNOC Drilling’s full year 2022 financial results have beaten market expectations, with year-on-year net profit up by 33% to $802 million.

— ADNOC Group (@ADNOCGroup) February 13, 2023

The company reported a fleet utilisation rate of 96 per cent for the year ending December 31, 2022, delivering exceptional revenue efficiency while cash from operations rose by 29 per cent year-on-year to $1.52bn supporting a free cash flow of $588m.

ADNOC Drilling expansion strategy

Meanwhile, ADNOC Drilling’s capital expenditure surged 62 per cent year-on-year to $942m in 2022 as the drilling company delivered on its ambitious plans to expand its fleet to meet customer demand.

The company accelerated its rig acquisition programme and added 16 new drilling units in 2022, cementing its position as one of the world’s largest drilling and well-completion fleets consisting of 115 rigs.

In March, ADNOC Drilling said it will acquire ten new-build hybrid power land drilling rigs for $252m to increase its onshore capacity and meet ADNOC Group’s accelerated production capacity target.

“Since our public listing in October 2021, we have relentlessly focused on value accretive investments and strategic growth. In 2022, we delivered a 33 per cent year-on-year increase in net profit to reach $802m for the year while driving EBITDA to $1.23bn through powerful revenue momentum coupled with excellent progress on cost efficiency,” said Abdulrahman Abdullah Al Seiari, CEO of ADNOC Drilling.

The outlook for 2023

The company also presented strong guidance for 2023, with revenue projected at between $3bn and $3.2bn, representing year-on-year growth of up to 20 per cent. It is expecting a record net profit in 2023 of $850m to $1bn in the same period.

“In 2023, we will continue to accelerate our growth trajectory, driven by our new market-leading rigs coming online, ongoing investments in integrated drilling services and our expansion into unconventional oil and gas development,” Al Seiari added.

Read: ADNOC Drilling to acquire 10 hybrid power land rigs for $252m

ADNOC Drilling signed a deal to acquire two additional premium offshore jack-up drilling units at a combined cost of $200m in December 2022 as the company has grown its offshore jack-up rig fleet to 32 since early 2021, with further significant expansion expected in 2023 and beyond.

The drilling firm also acquired two additional offshore jack-up rigs for $140m in September and secured a contract worth $980m to hire two jack-up offshore rigs and associated manpower equipment to support its offshore operations.

ADNOC Drilling listed on the Abu Dhabi Securities Exchange in 2021 after its majority shareholder, ADNOC, raised $1.1bn from investors through an initial public offering.