Adnoc awards $1.94bn in framework agreements to drive drilling growth

Adnoc Drilling is one of the largest drilling companies in the Middle East. Photo: Adnoc

An Adnoc Drilling rig. The company began operations in 1972 and currently operates 107 onshore, offshore and island rigs, of which 11 are rented. Photo: Adnoc

An old drill head at Adnoc's headquarters in Abu Dhabi. Khushnum Bhandari / The National

Adnoc Drilling has expanded its fleet of rigs, adding 67 since 2010, in line with the growth in oil and gas production capacity at its parent company. Khushnum Bhandari / The National

An Adnoc drilling rig. The company has achieved $2 billion in savings over the past five years through the use of technology. Photo: Adnoc

Drilling equipment on an artificial Adnoc Drilling island. Photo: Adnoc

An Adnoc employee uses a training simulator used to enhance workplace safety. Photo: Adnoc

An Adnoc artificial drilling island. The state oil company plans to raise production capacity to 5 million barrels per day by 2030. Photo: Adnoc

Adnoc Drilling made $281.6 million in net profit in the first half of 2021, with revenue hitting $1.12 billion. Photo: Adnoc

Adnoc Drilling will offer a fixed dividend of $325m for the second half of 2021. Photo: Adnoc

Equipment inspection at an Adnoc Drilling site. The company expects to increase its dividend by 5 per cent annually over the next five years, from $650m. Photo: Adnoc

Adnoc Drilling operates more than 9,600 wells across an area of 19,960 square kilometres. Photo: Adnoc

State-controlled oil and gas producer Adnoc awarded framework agreements valued at Dh7.1 billion ($1.94bn) to support drilling growth.

The pacts for wireline logging and perforation services are the largest of their kind in the oil and gas industry and were awarded to Adnoc Drilling, Schlumberger Middle East, Haliburton Worldwide Limited Abu Dhabi and Weatherford Bin Hamoodah Company after a “competitive” tender process, the company said on Thursday.

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.

“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,” said Dr Sultan Al Jaber, Minister of Industry and Advanced Technology and managing director and group chief executive of Adnoc.

“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 awards build on Adnoc's recent record investments in drilling-related equipment and services and supports gas self-sufficiency for the UAE.

In November, Adnoc said it was investing $6bn in drilling growth amid a push to boost its crude oil production capacity to 5 million barrels per day by 2030.

The investment is in the form of procurement awards to top-tier contractors for wellheads and related components, downhole completion equipment and related services, and liner hangers and cementing accessories, which are crucial in drilling for oil and gas and completing wells.

The new framework agreement awards cover Adnoc's onshore and offshore fields and will run for five years with an option to extend for a further two years, the company said.

Skilled employment opportunities will be created for UAE citizens by the successful companies, which will also work to identify local manufacturing opportunities, it said.

Adnoc Drilling’s share of the awards is the largest, reflecting its expanded service profile as a result of its transformation into a fully integrated drilling services company after the award to US energy services company Baker Hughes of a 5 per cent share in the company in 2018, Adnoc said.

“The award to Adnoc Drilling demonstrates its robust offering and capabilities as well as its integral role in Adnoc's future drilling activities,” said Yaser Almazrouei, Adnoc Upstream's executive director.

“The awards to all four companies will deliver substantial in-country value and create new job opportunities for UAE nationals.”

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, it said.

They will also result in hundreds of millions of dollars in cost savings, the company said.

Adnoc Drilling's 2021 net profit increased 6 per cent to $604 million on the back of higher revenue as the company continues to support Adnoc’s efforts to grow its production capacity.

The, company which is the largest national drilling company in the Middle East by rig fleet size, attributed the rise in revenue to $2.27bn, from $2.09bn in 2020, to additional drilling services provided to Adnoc and its subsidiaries Adnoc Onshore and Adnoc Offshore.

Adnoc Drilling raised more than $1.1bn in September from its initial public offering on the Abu Dhabi Securities Exchange, which was oversubscribed more than 31 times.

Adnoc remains Adnoc Drilling's majority shareholder, with an 84 per cent stake. Baker Hughes holds 5 per cent while US contract oil and gas driller Helmerich & Payne holds a 1 per cent stake.

In December, Adnoc Drilling signed a deal with Helmerich & Payne to improve the Abu Dhabi company’s land rig operational performance.

It also agreed on a five-year, $3.8bn contract in December with Adnoc Onshore for the continued provision of drilling, workovers and other well services that will drive work crew efficiency and improve rig move times and maintenance scheduling.