Adnoc Drilling JV Enersol aims to conclude planned acquisitions worth $1.5bn by end of 2025

Launched in January, Enersol is a tech-centric investment platform focused on the oilfield services business

Adnoc Drilling's offshore platforms. The oilfield services business makes up about 17 per cent of the company’s revenue. Photo: Adnoc

Enersol, the joint venture between Abu Dhabi companies Adnoc Drilling and Alpha Dhabi Holding, aims to achieve its goal of investing $1.5 billion in technology-driven companies within the oilfield services sector by the end of next year, a senior official said.

The company, which has already committed $550 million towards acquisitions, plans to spend the remaining funds over the next 12 months if it can successfully hit all the mergers and acquisitions targets in its pipeline, Khalil Massoud, chief investment officer at Alpha Dhabi Holding, told The National.

“We've got … an active pipeline. But, sometimes M&A deals take time to complete. Some of them end up closing [and] some of them, for whatever reason, may or may not materialise,” Mr Massoud said.

Enersol has been considering acquisition targets that are “extremely cash generative”, with low debt, and these companies are also exploring bolt-on acquisitions to grow their own operations, Mr Massoud added.

Launched in January, Enersol is a tech-centric investment platform aimed at bolstering Adnoc Drilling’s fast-growing oilfield services business, which makes up about 17 per cent of the company’s revenue.

In June, Enersol became a majority shareholder in US-based Gordon Technology, which specialises in measurement while drilling (MWD) technology. MWD helps oil and gas companies collect and send important real-time data during drilling operations.

In July, Enersol said it would acquire a 51 per cent stake in UAE-based NTS Amega – a manufacturer of advanced precision equipment.

Each deal needs to be financially attractive and viable when viewed from a traditional investment perspective, Youssef Salem, Adnoc Drilling’s chief financial officer told The National.

“It has to be a strategic deal in the sense that [it needs to be] synergistic and complementary within the portfolio [to ensure that] Enersol will evolve from being an investment platform into a tech-enabled provider in its own might,” Mr Salem said.

“We've identified a value chain for Enersol that [spans] from drilling to completion to production – the full suite of services [related] to [oil wells],” he said.

Mr Massoud stressed the need for a balanced approach to ensure Enersol's resilience in the face of oil price volatility and spending cuts by clients.

“Having a balanced portfolio of assets [is crucial] … from a geographic perspective [as well]. Although we're buying North America and Europe-heavy companies, we expect the Mena component to increase significantly over time,” he added.

Diversification push

Enersol is part of Adnoc Drilling’s efforts to offer more services and capture a larger market share, Mr Salem said.

The Adnoc subsidiary’s oilfield services sector has grown since Baker Hughes took 5 per cent in the company for $550 million in 2018. It was the first time Adnoc sold a direct interest in one of its services units to an international company.

“Starting in 2019, we started to expand the suite of services that we offer, and we effectively launched our oilfield services division in partnership with Baker Hughes,” Mr Salem said.

The US oilfield services giant “contributed some of the initial people, capabilities, technology and equipment off the back of which we initiated our oilfield services [business]”, Mr Salem said.

Adnoc Drilling recently partnered with Schlumberger, the largest oilfield services company globally, and drilling services firm Patterson-UTI to set up a joint venture named Turnwell Industries, aimed at boosting the UAE’s unconventional oil and gas programme.

Through Enersol, Adnoc Drilling aims to elevate its oilfield services business to the “next level” by expanding service offerings, increasing margins by owning a larger share of the supply chain, and “futureproofing” the business by securing critical intellectual property and patents, Mr Salem said.

Global energy businesses and national oil companies, especially in the Middle East, are increasing spending to develop their hydrocarbon reserves, driven by high oil prices over the past two years. Upstream oil and gas investment is expected to rise by 7 per cent this year to reach $570 billion, following a similar rise in 2023, according to the International Energy Agency.

“The growth in spending in 2023 and 2024 is predominantly by national oil companies in the Middle East and Asia,” the IEA said in a June report.