ADNOC Drilling reviewing Middle Eastern acquisition targets to boost regional growth

Anthony Di Paola, Bloomberg May 14, 2024

(Bloomberg) – Adnoc Drilling Co. PJSC plans to make even more acquisitions this year to help boost growth and is currently reviewing potential targets in the Middle East.

The drilling and services business of the biggest oil and gas producer in the United Arab Emirates has already concluded two joint-venture deals and bought a company since January. It’s set to absorb three more companies through a technology venture this year, Chief Financial Officer Youssef Salem said in an interview.

The company is looking at other drilling companies for potential acquisitions as it seeks to expand regionally in countries such as Kuwait and Oman, he said. Growth will help state-owned Adnoc Drilling likely exceed its goal to boost dividends by 10% a year through 2028, Salem said.

“The growth we expect will sustain it well beyond five years,” Salem said, referring to the shareholder payout. “We expect the growth in reality to probably end up being even higher over time than the 10% because of how cash-flow generative we are, plus the debt capacity that we have.”

The company has untapped bank lines it can use and doesn’t intend to issue bonds this year.

Adnoc Drilling’s parent company, Abu Dhabi National Oil Co., is spending billions of dollars to raise production capacity to 5 MMbpd this decade, requiring new drilling rigs in desert fields and at offshore deposits in the Persian Gulf.

Adnoc said this month it had already raised oil production capacity to 4.85 MMbpd.

The UAE is the third-largest producer in OPEC. Actual production is lower than capacity because the country pledged to pump little more than 3 MMbpd as OPEC+, the grouping that includes producers such as Russia, seeks to bolster crude markets.

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