Adnoc Drilling records 25% rise in first-quarter profit on revenue boost from new rigs

Adnoc Drilling added eight new land rigs to its operational fleet in the second half of 2022. Photo: Adnoc Drilling

Adnoc Drilling, the largest national drilling company in the Middle East by rig fleet size, has reported a 25 per cent rise in first-quarter net profit, as addition of new land rigs into the fleet boosted revenue.

Net income for the three months ended March 30 rose to $218.6 million, from $174.4 million in the same period last year, the company said in a filing on Wednesday to the Abu Dhabi Securities Exchange, where its shares are traded.

Revenue during the reporting period rose by 19 per cent to $716 million mainly due to new land rigs entering the operational fleet in the second half of 2022, Adnoc Drilling said.

The results “demonstrate the effective execution of our strategy, to grow earnings by expanding our fleet and our offering”, said Abdulrahman Al Seiari, chief executive of Adnoc Drilling.

“To maximise value for shareholders now and into the future, we will continue to secure high-quality, long-term contracts that offer superb future earnings visibility, as well as protection against market volatility.”

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

In November, Adnoc Drilling was awarded three framework agreements valued at $4 billion. It also secured a $980 million contract from Adnoc to hire two jack-up offshore rigs, associated manpower and equipment.

In August, it was awarded two contracts worth $1.5 billion and $1.9 billion by Adnoc Offshore to boost production capacity.

It also received two contracts worth $2 billion linked to Adnoc's Hail and Ghasha development project in July.

In March this year, Adnoc Drilling also signed an agreement to purchase 10 newbuild hybrid power land drilling units to support Adnoc’s accelerated production capacity targets and sustainability plans.

The new hybrid rigs utilise high capacity batteries to improve power delivery while reducing greenhouse gas emissions by up to 15 per cent.

Adnoc Drilling said onshore revenue in the first quarter rose 11 per cent annually to $355 million as a result of eight new land rigs entering the operational fleet last year.

Meanwhile offshore jack-up revenue increased by 28 per cent year on year to $184 million due to the introduction of five new jack-ups into the operational fleet in the July to December period.

Oilfield services revenue also grew 43 per cent to $126 million due to “increased activity volume across the entire portfolio”, the company said.

Earnings before interest, taxes, depreciation and amortisation in the first quarter rose 19 per cent to $333 million.

Adnoc Drilling maintained its fiscal year 2023 revenue guidance of between $3 billion and $3.2 billion, with ebitda of $1.35 billion to $1.5 billion and net income of $850 million to $1 billion.

Capital expenditure is forecast to be in a range of $1.3 billion to $1.75 billion this year, it said.

The company “remains committed to annual growth in its dividend per share of at least 5 per cent per annum over the four years from 2023 to 2026”, it added.