ADNOC Drilling has recorded significant first-quarter revenue and EBITDA over the previous year for the period ending 31 March 2024.

ADNOC Drilling has exceeded market expectations again this quarter, the third in a row, with revenue increasing to US$886 million, up 24 per cent year-on-year. The Offshore Jack-up and Oilfield Services (OFS) segments drove revenue growth, increasing 51 per cent and 16 per cent respectively year-on-year. EBITDA grew 31 per cent year-on-year to US$437 million, driven by strong operational performance, leading to a year-on-year EBITDA margin expansion to 49 per cent. Net profit for the quarter reached US$275 million, up 26 per cent year-on-year.

Abdulrahman Abdulla Al Seiari, Chief Executive Officer of ADNOC Drilling, said: "Our strong first-quarter performance demonstrates that we have entered a new era for the company as we go from strength to strength, delivering on and beyond the expectations of the market, our customers and our shareholders. Confidence in our growth trajectory and cash flow generation ability going forward, has resulted in our Board of Directors recommending an enhanced progressive dividend policy that will further bolster shareholder returns.

"Our multi-faceted strategy of enabling ADNOC’s conventional and unconventional production capacity growth to meet the world’s growing demand for energy will further transform the business in 2024-onwards. The US$1.7 billion contract award represents a transformational opportunity as the UAE’s world class unconventional energy resources will require many thousands of wells and we are in prime position to deliver them. Aligned to this is the investment in, and adoption of, artificial intelligence and advanced technologies through our strategic joint venture, Enersol, that has a US$1.5 billion mandate to invest in and acquire global energy technologies."

Highlights for the first-quarter results included onshore revenue, which reached US$411 million, up 16 per cent year-on-year, mainly due to increased onshore activity, driven by the contribution from new rigs commencing operations, while offshore jack-up revenue was US$278 million, a 51 per cent increase compared to 2023, mainly due to higher activity from the additional jack-up rigs contributing revenue.

Offshore island revenue for the quarter was in line with the first quarter of 2023 as activity was broadly stable year-on-year. Oilfield services revenue reached US$146 million, an increase of 16 per cent year-on-year driven by increased activity in drilling fluids and directional drilling. The overall volume of activity of the segment is expected to increase throughout the year, in line with planned phasing and driven by IDS rigs ramp-up and unconventionals.

The Board of Directors also recommended a new, progressive dividend policy with dividends expected to grow by at least 10 per cent per annum on a dividend per share basis over the next five years (2024-2028). Moreover, the Board of Directors, at its discretion, may consider additional dividends over and above the progressive dividend policy after considering growth opportunities while maintaining net debt/EBITDA up to 2x, excluding transformative M&A.

The new dividend policy is subject to shareholder approval at an upcoming General Shareholder Meeting, the date of which will be advised shortly.

As per the policy, dividends are expected to be paid semi-annually with a final dividend distributed to shareholders in the first half and the payment of the interim dividend in the second half of each fiscal year.

Meanwhile, ADNOC Drilling has been awarded a transformational US$1.7 billion contract to provide drilling and associated services for the recovery of unconventional energy resources. The contract will see ADNOC Drilling deliver 144 unconventional oil and gas wells. ADNOC Drilling will leverage the technology pipeline of its strategic joint venture Enersol and ADNOC’s world-leading AI, digitisation, and advanced technologies to contribute to responsible energy delivery.

To service the contract, and explore the considerable future opportunities in unconventional resources, ADNOC Drilling has incorporated a new company, Turnwell Industries LLC OPC. ADNOC Drilling has signed a term sheet with industry leaders SLB and Patterson UTI for potential partnership and support with the latest technology, specialist services and innovations in the unconventional energy drilling space subject to signing definitive agreements and any necessary regulatory approvals.

In addition, at the end of the first quarter 2024, ADNOC Drilling’s fleet comprised 137 rigs, 133 owned plus four lease-to-own land rigs, an increase of 22 rigs year-on-year. Thirteen of the rigs included in the rig count are hybrid powered land rigs that utilise battery storage to improve power delivery and reduce emissions by up to 15 per cent per rig.

Three additional hybrid land rigs are expected to enter the fleet this year, for a total of 16 all of which were ordered in 2023.

ADNOC Drilling reported a fleet availability rate of 97 per cent for the quarter, delivering exceptional revenue and operational efficiency.