Adnoc Drilling records 11% rise in second-quarter profit on higher revenue

Adnoc Drilling, the largest national drilling company in the Middle East by rig fleet size, has reported an annual 11 per cent rise in second-quarter net profit, as the addition of new land rigs to the fleet boosted revenue.

Net profit for the three months to the end of June rose to $228 million, the company said in a filing on Friday to the Abu Dhabi Securities Exchange, where its shares are traded.

Revenue during the reporting period rose by more than 8 per cent to $724 million, driven by new rigs entering the fleet, strong cost performance and oilfield services expansion, Adnoc Drilling said.

“This strong and growing financial performance underpins our progressive dividend policy and we expect the 2023 interim dividend to be in line with it, further demonstrating our continuous commitment to sustained value creation for our shareholders,” said chief executive Abdulrahman Al Seiari.

Adnoc Drilling has provided integrated drilling services to sister companies Adnoc Onshore and Adnoc Offshore since 2019. It has been expanding operations as parent company Adnoc looks to boost its production capacity to 5 million barrels per day by 2027.

The company will focus more on the UAE’s unconventional oil and gas resources this year, Mr Al Seiari told The National in May, adding that the company is in the early stages of expanding its operations in the broader GCC region.

Adnoc Drilling's net profit for the first half of the year climbed 18 per cent on an annual basis to $446.3 million. Revenue for the six-month period stood at $1.4 billion, up more than 13 per cent from the same period last year.

“Adnoc Drilling’s excellent financial performance in the first half of 2023 is testament to our strategy of expanding both our drilling fleet and service offering while also improving our margins through strong cost performance,” Mr Al Seiari said.

During the first half of 2023, the company announced the signing of contracts worth more than $2.4 billion, consisting of a $2 billion offshore jack-up contract award and a $412 million integrated drilling services contract, it said.

It also signed sale and purchase agreements for the acquisition of two premium offshore jack-ups and 16 newbuild hybrid power land rigs during the six-month period.

“We progressed on our goal to expand the fleet, signing agreements to build 16 hybrid powered land rigs, which also form a significant additional element of our decarbonisation strategy,” Mr Al Seiari said.

The company's oilfield services (OFS) revenue grew by 45 per cent year-on-year to $260 million in the first half, “with improved margins”, he added.

Onshore revenue of $701 million in the first half was broadly in line with last year.

“The increase of revenue, driven by new rigs entering the fleet from the second half 2022, was offset by lower year-on-year reimbursement of cost escalation claims, particularly due to a reduction of diesel prices,” the company said.

Meanwhile, offshore jack-up revenue increased nearly 31 per cent year on year to $376 million due to the introduction of five new jack-ups into the operational fleet during the second half of 2022.

Earnings before interest, taxes, depreciation and amortisation in the first quarter increased by 15 per cent year-on-year to $344 million.

The interim dividend for the current year is expected to increase by a minimum of 5 per cent versus last year, Adnoc Drilling said, adding that the dividend will be distributed by the end of October.