ADNOC, its subsidiary ADNOC Drilling, and Helmerich & Payne (H&P) jointly announced a strategic alliance that will see ADNOC Drilling acquire eight FlexRig land rigs from H&P for $86.5 million. Following this transaction, H&P will make a $100 million cornerstone investment into ADNOC Drilling’s recently announced Initial Public Offering (IPO).
The strategic alliance and rig acquisition will support ADNOC’s target of reaching 5 million bbl/day production capacity and gas self-sufficiency for the UAE by 2030, along with plans to unlock its unconventional oil and gas resources. For H&P, these agreements help facilitate its goal of allocating capital internationally, particularly in the MENA region, by accelerating its access into the Abu Dhabi market as a key platform for further regional expansion.
“This exciting alliance and value creation opportunity will provide ADNOC Drilling with access to new world-class rigs and services, enabling it to continue to support ADNOC in our ambitious production capacity expansion plans,” said Dr Sultan Ahmed Al Jaber, UAE Minister of Industry and Advanced Technology and ADNOC Managing Director and Group CEO. “H&P’s cornerstone investment in our planned ADNOC Drilling IPO further reinforces ADNOC’s continued success as a primary catalyst in attracting leading global investors and industry partners into Abu Dhabi and the UAE.”
On 6 September, ADNOC announced its intention to float a 7.5% minority stake of ADNOC Drilling on the Abu Dhabi Securities Exchange through an IPO. Both ADNOC and H&P will remain committed, long-term shareholders in ADNOC Drilling.
“We are excited to enter into this strategic alliance with ADNOC Drilling and the value this alliance can create for both companies and stakeholders,” said John Lindsay, H&P President and CEO. “Our investment in ADNOC Drilling is an additional step in the execution of our international growth strategy to allocate additional capital outside the US and serves as a testament of our belief in what ADNOC Drilling and H&P can achieve together. We look forward to partnering with ADNOC and ADNOC Drilling to help create a similar value proposition that we have for customers in the U.S. and other international locations.”
H&P’s investment will be at the IPO price and is subject to a three-year lock-up. As stated in the ADNOC Drilling Prospectus, like other shareholders, H&P expects to benefit from ADNOC Drilling’s commitment to a robust dividend policy. The rigs are expected to be delivered and commissioned in stages over a 12-month period, subject to acceptance upon successful completion of a final inspection on customary terms and conditions.
The strategic alliance and investment represents a natural evolution in ADNOC’s value creation plan and will provide ADNOC Drilling with a significant competitive advantage in the region, enabling it to further capitalize on its leading position as the largest national drilling company in the Middle East with 96 rigs, nearly twice the size of the next-largest regional drilling provider.