Adnoc Drilling to join MSCI Index this month

The inclusion will boost liquidity in company's stock and will broaden its investor base

An Adnoc Drilling rig at Upper Zakum oilfield. The company listed its share on the ADX in October 2021. Photo: Adnoc

Abu Dhabi-listed Adnoc Drilling will become a constituent of MSCI Indexes this month, a move that will allow the largest national drilling company in the Middle East by rig fleet size to broaden its investor base.

Adnoc Drilling will be included in the MSCI Emerging Market Index and become the 12th member of the MSCI UAE index after meeting the necessary criteria, the company said in a statement to the Abu Dhabi Securities Exchange, where its shares are traded.

The inclusion will be effective post-market close on August 30.

“This milestone will allow Adnoc Drilling to further broaden and diversify its investor base and make its unique business model and return profile more visible to the global markets,” Abdulrahman Al Seiari, chief executive of Adnoc Drilling, said.

The achievement reflects the company’s “unwavering commitment” to operational safety, sustainable growth, investor focus, as well as continuous support from the shareholders, Mr Al Seiari said.

The MSCI emerging market index is tracked by investors managing trillions of dollars in assets. The benchmark is designed to measure the performance of large and mid-cap stocks across 24 emerging markets and currently has more than 1,320 constituents.

The MSCI UAE gauge is also a measurement for investment decision-making for investors in the GCC and the broader Middle East.

Its constituents include First Abu Dhabi Bank, Emaar Properties, e&, Emirates NBD, Aldar Properties and Abu Dhabi Commercial Bank.

The inclusion in MSCI’s indexes usually results in a boost to liquidity in a company’s shares as investors allocate funds to index components according to their weighting.

Adnoc Drilling said becoming a constituent of MSCI indexes will allow it “greater visibility among global investors” as it increases the credibility of the stock in financial markets.

The inclusion will not only allow the flow of expected passive inflows into the stock but it will also grow interest in active institutional investors tracking MSCI indexes, the company said.

In May, Adnoc raised $935 million by selling 880 million additional shares in its drilling unit to institutional investors after recording strong demand for the offering.

The share sale, representing 5.5 per cent of Adnoc Drilling’s total issued share capital, registered robust demand from investors in the GCC as well as globally, Adnoc Drilling said at the time.

The offering increased Adnoc Drilling’s free float to 16.5 per cent, with its parent retaining a majority stake in the company.

The rise in free float allowed the company to meet all the necessary MSCI Index inclusion requirements, it said on Tuesday.

Adnoc Drilling has been actively investing in technology and infrastructure to tap into the UAE's vast unconventional hydrocarbon reserves.

Its parent company, Adnoc, which is responsible for most of the UAE's crude production, aims to reach an output capacity of 5 million barrels per day by 2027. It can already produce up to 4.85 million bpd.

Last year, Adnoc Drilling and Alpha Dhabi Holding set up a joint venture, Enersol, aiming to invest up to $1.5 billion to acquire technology-enabled companies in the oilfield services and energy sectors.

About one-third of the total planned investment has been allocated, amounting to about $500-$600 million, Mr Al Seiari told The National earlier this month, adding that the full amount will be exhausted by the end of this year or early next year.