Adnoc Drilling hopes to secure oil drilling tenders in Kuwait after key approval

Adnoc Drilling hopes to secure oil drilling tenders in Kuwait, Opec’s fifth-largest producer, after being approved for inclusion on Kuwait Oil Company’s list of approved contractors, the Adnoc subsidiary’s chief executive said.

“We will definitely be getting potential tenders to participate, and we will be assessing each one separately. This is where the company … will go more regional and international,” Abdulrahman Al Seiari told The National in an interview on Monday.

Kuwait will be Adnoc Drilling’s second market outside of the UAE, following Jordan, where the company has been operating a land rig since the fourth quarter of 2023.

Kuwait Oil Company is a subsidiary of Kuwait Petroleum Corporation (KPC), the country’s state-run energy company.

Kuwait is one of the “tier one” countries Adnoc Drilling has been looking to enter in the region since its initial public offering in 2021, Mr Al Seiari said, adding that the company was in the pre-qualification process in Saudi Arabia.

Adnoc Drilling’s Kuwait entry comes weeks after the country discovered “huge commercial quantities” of oil and gas.

Preliminary estimates suggest the latest discovery at the Al Nokhatha field east of the Kuwaiti island of Failaka, could yield about 2.1 billion barrels of light oil and 5.1 trillion standard cubic feet of gas, which corresponds to about 3.2 billion barrels of oil equivalent, according to the Kuwait Oil Company.

Kuwait aims to raise its oil production capacity to 3.15 million bpd, from the current 2.7 million bpd, within the next four years.

The country also plans to increase its natural gas output by about 79 per cent to 930 million cubic feet per day in the same period.

Adnoc Drilling, the largest national drilling company in the Middle East by rig fleet size, has been actively investing in technology and infrastructure to tap into the UAE's vast unconventional reserves.

Adnoc, responsible for most of the UAE's crude production, aims to reach an output capacity of five million bpd 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, that aims to invest up to $1.5 billion to acquire technology-enabled companies in the oilfield services and energy sectors.

Around one-third of the total planned investment has been allocated, amounting to about $500-$600 million, Mr Al Seiari said, adding that the full amount will be used in acquisitions by the end of this year or early next year.

On Monday, Enersol agreed to purchase a 100 per cent equity stake in EV Holdings for about $45 million from UK-based private equity firm Dunedin.

EV, which provides vision-based diagnostics and analytics services for the oil and gas sector, has a global footprint with a presence in 36 countries, including the UAE and Saudi Arabia.

“We will be owning technologies now. Rather than taking it as a service, we will be providing it as a service to other customers,” Mr Al Seiari said.

In May, Adnoc raised $935 million by selling 880 million additional shares in the 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 and globally, Adnoc Drilling said in a statement 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.

Mr Al Seiari does not expect another stake sale in the short-term, but said that the decision would ultimately be made by Adnoc.

Higher Profit Forecast

Adnoc Drilling reported a 29.4 per cent increase in second-quarter profit, driven by the expansion of operations across all business segments.

Net profit for the three months to the end of March rose to $295 million, from $228 million in the same period a year earlier, the company said in a filing to the Abu Dhabi Securities Exchange, where its shares are traded.

The company’s second-quarter revenue surged 29 per cent year on year to $935 million.

Adnoc Drilling also raised its profit and revenue forecasts for 2024.

For the full year, the company expects revenue in the range of $3.7 billion to $3.85 billion, up from a previous forecast of $3.6 billion to $3.8 billion.

Adnoc Drilling has forecast a net profit of $1.15 billion to $1.3 billion, up from an earlier range of $1.05 billion to $1.25 billion.