Adnoc Drilling awarded $733m contract for three island rigs

Additions will increase company's rig count to 148 by 2026

Adnoc Drilling said its new rigs will operate on new and established artificial islands. Photo: Adnoc

Adnoc Drilling, the largest national drilling company in the Middle East by rig fleet size, has received a contract worth $733 million from Adnoc Offshore for three island drilling rigs to support the growing operations at Abu Dhabi’s offshore Zakum field.

The drilling unit of the state-controlled oil major Adnoc has partnered with the Hong Kong-based Honghua Group for the design and building of the rigs, Adnoc Drilling said in a statement on Wednesday to Abu Dhabi Securities Exchange, where its shares are traded.

The rigs will operate on new and established artificial islands at the offshore field.

The two companies will incorporate artificial intelligence and digitisation in the design and operation of the “next generation drilling rigs” and will also collaborate with AIQ, an Abu Dhabi-based AI firm.

The contract marks a “significant milestone in our company’s accelerated growth journey”, Abdulrahman Al Seiari, chief executive of Adnoc Drilling, said.

“These new island rigs will be the most advanced in the world” and the company’s partnership with Honghua Group will “amplify the creativity and ingenuity of our industry”, he added.

Adnoc, responsible for most of the UAE's crude production, is working to develop its reserves as it reaches for output capacity of five million barrels per day by 2027. It can produce up to 4.85 million bpd now.

Since the fourth quarter of 2021, Adnoc Drilling has invested more than $2.2 billion in building its fleet, to primarily serve its parent company.

With the addition of the three new rigs, the total rig count of Adnoc Drilling, which already operates 10 Island rigs, will rise to 148 by 2026, it said.

The company expects the delivery of rigs and commencement of operations in 2026 and the first full-year revenue from the new rigs in 2027.

In May, Adnoc Drilling also received a $1.7 billion contract from Adnoc to provide drilling services for the recovery of unconventional oil and gas resources.

Adnoc Drilling is executing the contract through its subsidiary Turnwell Industries, the company said at the time.

Adnoc has estimated unconventional recoverable oil resources of 22 billion barrels of very light and sweet crude, comparable with its flagship lower-carbon Murban grade.

Adnoc, which listed its drilling unit in on the ADX in 2021, raised $935 million by selling 880 million additional shares in Adnoc Drilling in May to institutional investors after recording strong demand for the offering.

The sale represented 5.5 per cent of Adnoc Drilling’s total issued share capital, boosting its free float to 16.5 per cent, with its parent retaining a majority stake.

Tech focus

Adnoc Drilling is also pushing to incorporate advanced technologies, including AI, across different segments of its operations, that include smart drilling design, engineering and production solutions.

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

Last month, the JV, Enersol, agreed to increase its stake in US-based oil engineering company Gordon Technologies in a $270 million deal.

The move by Enersol to acquire an additional 42.2 per cent stake, along with its existing 25 per cent, will make the Abu Dhabi company the majority shareholder in Gordon Technologies, Adnoc Drilling said at the time.