ADNOC Drilling: continuously surpassing expectations
Abdulrahman Abdulla Alseiari, CEO of ADNOC Drilling, talks to The Energy Year about the company’s contribution to the UAE’s 5-million-bopd goal, the impact of the company’s IPO and the benefits of integrated drilling services. With one of the world’s largest rig fleets, ADNOC Drilling deploys services and expertise to support the ADNOC Group’s operations.
In what ways is ADNOC Drilling contributing to the UAE’s ambitious goal of increasing its production capacity to 5 million bopd by 2027?
ADNOC Drilling is rising to the challenge laid down by ADNOC to meet the growing global demand for energy. As the key enabler of ADNOC’s accelerated production capacity growth, we are seizing the opportunity to deliver – accelerating our work programme by three years to the benefit of shareholders and the UAE.
In 2022, our fleet expansion programme led to the highest-ever number of operational rigs – bolstering growth with further expansion in the pipeline in 2023 and beyond. The company’s rig acquisition programme added 16 new drilling units in 2022, establishing one of the world’s largest drilling and well completion fleets, consisting of 115 rigs. Based on our accelerated activity, our owned rig count will total 142 by 2024, and with these additional rigs will come the core of our additional and accelerated revenues.
As our fleet grows, so too does our offering. In 2018, ADNOC Drilling added an Oilfield Services (OFS) business segment to offer customers integrated drilling services (IDS) – start-to-finish drilling and completion services – driving efficiency and allowing us to capture more value from every well. OFS has significantly grown in this short time. In the last quarter of 2022, we achieved record OFS revenue of USD 123 million due to offshore unconventional activity and in the first quarter of 2023, the segment grew by a massive 43%.
In October 2021, ADNOC Drilling was listed on the Abu Dhabi Securities Exchange. How has this move impacted the company?
In the 18 months since our IPO, ADNOC Drilling has gone from strength to strength, consistently delivering record revenue and exceptional shareholder returns.
ADNOC’s 2027 accelerated production growth directly translates into an acceleration of drilling activity. 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.
Our revenues, totalling USD 2.67 billion in 2022, are substantial, stable and growing fast. ADNOC Drilling’s unique position as the key enabler of ADNOC’s accelerated production capacity growth means, effectively, an investment in ADNOC Drilling is investment in ADNOC and the future of the UAE.
Our progressive dividend policy reflects robust cashflow. The total dividend for 2022 was USD 682.5 million, or 15.67 fils per share, with annual distribution expected to grow by at least 5% per year through 2026 in keeping with our progressive policy.
As we look ahead, ADNOC Drilling’s strong balance sheet provides the financial flexibility to deliver exceptional returns – both growth and yield – well into the future.
What recent acquisitions has the company completed to boost its onshore and offshore operational footprint? What further near-term acquisitions do you anticipate?
ADNOC Drilling already owns and operates one of the largest multi-discipline drilling fleets in the world, and it is our people who are behind every well drilled in Abu Dhabi. To ensure the realisation of ADNOC’s accelerated production capacity growth, we embarked on a bold fleet expansion plan that saw a record 16 new drilling units added to the fleet in 2022. We will continue to grow our fleet by adding a further 27 rigs, bringing our total rig count to 142 by 2024.
What benefits come with integrated drilling services?
Our IDS offering enables ADNOC Drilling to offer a total solution to clients, driving value for customers and shareholders alike. The efficiency gains that result from IDS are crucial to delivering the wells needed to meet ADNOC’s 2027 strategic growth.
IDS-driven efficiency increases allow us to capture more value from every well, and already a growth driver across our business, we plan to double OFS revenue by 2025. Our exceptional 2022 results of USD 405 million in OFS revenue for the full year represented an increase of 23% compared to 2021. In the last quarter of 2022, we achieved record OFS revenue of USD 123 million due to additional offshore unconventional activity during the quarter.
How is ADNOC Drilling embracing the latest technological advances and tools to be at the forefront of innovation?
The story of ADNOC Drilling’s evolution is one of innovation and technological advancement. With an ethos of keeping it simple, we have consistently acquired or developed technologies that advance efficiency and safety. Today, the use of digitalisation, automation and innovation is key to delivering to our clients on-time and on-budget while reducing our environmental footprint and minimising emissions.
We recently signed a contract to purchase 10 land hybrid power rigs that can reduce emissions by up to 15%. These hybrid rigs will help to accelerate our decarbonisation efforts, coming on the heels of piloting hybrid battery use and energy storage in our onshore fleet.
We are proud to have led the global industry in pioneering large-scale offshore drilling from artificial islands. Up to 200 wells can be drilled from each island, and the artificial islands allow extended-reach drilling (ERD) that can reduce well delivery and production costs while helping to preserve the marine environment. ERD delivers multiple wells from a single surface location, reducing well delivery time and costs as well as emissions. Further, “walking rigs” at the islands save time and money by moving from one site to another without work crews needing to dismantle and reassemble them.
What are your main goals and objectives for 2023-2024, and how do they align with sustainability and lower-carbon objectives?
As we continue to build capacity to enable ADNOC’s production capacity growth, our fundamental commitment is to maximum energy, minimum emissions. In all we do, we advance ADNOC’s goal of reducing greenhouse gas intensity by 25% by 2030.
Our decarbonisation plan rests on three broad streams of complementary activity: firstly, we continually aim to drive greater efficiencies – through IDS we are simplifying the drilling and completions process, increasing efficiencies right across the value chain. More efficient drilling means reduced emissions. Secondly, we are minimising the emissions of our drilling fleet by adding new hybrid rigs and progressively rolling out hybrid power to the existing fleet. Lastly, we are addressing emissions associated with the global supply chain by supporting increased local manufacturing in the UAE.