Lots of news from Adnoc Drilling: We have an earnings report from Abu DhabiNational Oil Company (Adnoc) Drilling, as well as news of a fresh USD 1.7 bn contract to unlock “unconventional energy resources” in the UAE.

#1- Adnoc Drilling secures USD 1.7 bn contract for unconventional drilling: The company was awarded a USD 1.7 bn contract from its parent company, Adnoc, to drill for the recovery of “unconventional energy resources” across 144 wells in the UAE, it said in an ADX disclosure (pdf). The project’s initial phase expects to employ up to nine land rigs, five of which were included in the company’s fleet in 2023.

What does “unconventional” mean? The term is used to refer to oil and gas resources trapped in subsurface reservoirs that require additional technology to unearth. Abu Dhabi alone is estimated to hold some 220 bn barrels of unconventional oil and 460 tn cubic feet of unconventional gas, according to the statement.

The details: Adnoc Drilling set up a new company — dubbed Turnwell Industries — for the project, and inked agreements with US drilling oil and gas wells companies Schlumberger Middle East and Patterson-UTI to support drilling operations.

The roles: Schlumberger will hold a minority equity interest in Turnell as part of the agreement, while Patterson-UTI will offer up drilling, completion, and other oilfield service expertise, in addition to an undisclosed limited cash contribution, according to a press release picked up by the Wall Street Journal. Patterson-UTI could also later contribute drilling equipment depending on the estimated returns, it said.

#2- Adnoc Drilling’s normalized net income rose 26% y-o-y to USD 275 mn in 1Q 2024, according to the company’s earnings release (pdf). The company posted USD 886 mn in revenues for the period, up 24% y-o-y on the back of a 51% y-o-y growth in the company’s offshore jack-up segment and a 16% y-o-y increase in its oilfield services segment, Adnoc Drilling said.

Looking ahead: The company expects to expand its rig count to 140, including three new hybrid land rigs, by the end of the year, the company said. Adnoc Drilling also forecasts improved revenues in the mid- and long-term, driven by the unconventional development project, which provides “significant potential upside” to the business’ financials.

New dividend policy: Adnoc Drilling’s board proposed an amended dividend policy for 2024-2028, aiming at growth of 10% per share a year over the next five years. Dividends will be paid semi-annually with a final dividend distributed to shareholders in 1H, and an interim dividend paid in the second half of each fiscal year.

WATCH THIS SPACE-The company plans to acquire three tech firms through a tech venture this year to accelerate the company’s growth, Adnoc Drilling CFO Youssef Salem told Bloomberg in an interview. The oil giant’s drilling arm is also eyeing the acquisition of drilling firms to expand its foothold in neighboring countries such as Kuwait and Oman, Salem revealed.

REFRESHER- Adnoc Drilling has already embarked on its expansion spree, forming a USD 1.5 bn JV with Alpha Dhabi in January for global investments in energy technology and the enhancement of tech-enabled energy services. Adnoc Drilling holds a 51% majority share in the JV, with Alpha Dhabi owning the remaining 49%.

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