Adnoc Drilling third-quarter profit surges 36% on revenue boost

Rise in rig activity underpinned strong earnings as revenue climbed to $776 million

Adnoc Drilling's net profit for the three months to the end of September rose to $257 million. Photo: Adnoc

Adnoc Drilling, the largest national drilling company in the Middle East by rig fleet size, has reported a 36 per cent rise in third-quarter profit as revenue climbed amid higher rig activity.

Net profit for the three months to the end of September rose to $257 million, the company said in a regulatory filing on Tuesday to the Abu Dhabi Securities Exchange, where its shares are traded.

Revenue during the period rose by about 16 per cent to $776 million, boosted by increased onshore rig activity.

“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,” said Abdulrahman Al Seiari, chief executive of Adnoc Drilling.

“These results demonstrate the company’s ability to continue to deliver profitable growth as we maintain our safe, efficient and sustainable operations,” Mr Al Seiari said.

The company said all its business lines posted strong growth in the July-September quarter.

Revenue from onshore, offshore jack-up, offshore Island and oilfield services businesses rose 2 per cent, 39 per cent, 4 per cent and 41 per cent year-on-year, respectively.

Adnoc Drilling added four jack-up rigs in the third quarter, which will start operations in December. The company now has a fleet of 134 operational rigs.

“The accelerated fleet expansion since the IPO [initial public offering] underpins our growth targets, while boosting revenue as incoming rigs commence operations,” the company said.

Adnoc Drilling's net profit for the first nine months of the year rose 24 per cent on an annual basis to $704 million. Revenue during the same period climbed about 14 per cent to $2.23 billion.

Driven by increased visibility on earnings and profitability, the company has also updated its 2023 guidance on earnings before interest, tax, amortisation and depreciation (ebitda), net profit and capital expenditure.

The company now expects total revenue of between $3 billion to $3.2 billion, ebitda of $1.4 billion to $1.5 billion and net profit of $900 million to $1 billion. It expects capex to reach around $1.3 billion this year.

Adnoc Drilling raised $1.5 billion from a new syndicated loan last month and secured a dirham-denominated revolving credit facility of Dh1.84 billion ($500 million).

The loan facility will repay the expiring syndicated term loan this month, while the new revolving credit facility will support the company's growth and working capital needs, the company said.

Adnoc Drilling has provided integrated drilling services to sister companies, Adnoc Onshore and Adnoc Offshore since 2019. It has been expanding operations as parent company Adnoc looks to boost its production capacity to 5 million barrels per day by 2027.

The company said it is already providing drilling services in Jordan, which marks its international expansion.

The economics of the project were in line with existing returns achieved in Abu Dhabi, Adnoc Drilling said, without naming the project or a partner.

Last week, Adnoc Drilling and Alpha Dhabi Holding, a unit of Abu Dhabi's International Holding Company, set up a joint venture that aims to invest up to $1.5 billion to acquire technology-enabled companies in the oilfield services and energy sectors.

Adnoc Drilling will own 51 per cent of the venture, with Alpha Dhabi holding the remainder.

The company said that a 9 per cent corporate income tax would be applicable to the company from January 1.

“In light of our existing contractual framework agreement, Adnoc Drilling is already working with the clients on the implementation of a reimbursement mechanism to recover the financial impact,” the company said.

The UAE introduced federal corporate tax this year that levies a headline 9 per cent rate on taxable income exceeding Dh375,000.