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Abu Dhabi National Oil Company (ADNOC) and its subsidiary ADNOC Drilling Company (ADNOC Drilling) and Helmerich & Payne, Inc. (NYSE: HP) (H&P), a provider of drilling platform technology and drilling solutions, joined forces today Announced the formation of a strategic alliance, which will enable ADNOC Drilling to acquire eight FlexRig land drilling rigs from H&P for US$86.5 million.
Following this transaction, H&P will make a $100 million cornerstone investment in ADNOC Drilling’s recently announced initial public offering (IPO).
Strategic alliances and rig acquisitions will support ADNOC’s goal of reaching 5 million barrels per day (mbpd) production capacity and natural gas self-sufficiency in the UAE by 2030, as well as plans to release its unconventional oil and gas resources. These agreements will further promote the growth and expansion of ADNOC Drilling and improve its rig-based operational performance by providing a world-class fleet of H&P FlexRig land rigs and leveraging H&P’s expertise and technology.
In addition, the alliance will support ADNOC Drilling to further promote operational excellence by improving maintenance efficiency, supplementing supply chain capabilities, and increasing engineering and drilling rig design capabilities. The alliance will also provide more competitive completion times, higher drilling efficiency and improved well economics.
For H&P, these agreements help accelerate its entry into the attractive and fast-growing Abu Dhabi market as a key platform for further regional expansion, thereby realizing its distribution internationally (especially in the Middle East and North Africa) The goal of capital. H&P’s cornerstone investment in the upcoming ADNOC Drilling IPO also highlights its confidence in the attractiveness and long-term value creation potential of ADNOC’s unique energy assets to leading international market participants.
Dr. Sultan Ahmed Al Jaber, UAE Minister of Industry and Advanced Technology and ADNOC Managing Director and Group Chief Executive Officer, said: “I am delighted to announce the establishment of a strategic alliance with Helmerich & Payne, a world-renowned drilling solution provider. This exciting alliance and The value creation opportunity will provide ADNOC Drilling with new world-class drilling rigs and services to enable it to continue to support ADNOC’s ambitious capacity expansion plans.
“H&P’s cornerstone investment in our planned ADNOC Drilling IPO further strengthens ADNOC’s continued success as a major catalyst for attracting leading global investors and industry partners into Abu Dhabi and the UAE.”
On September 6, 2021, ADNOC announced its intention to issue a 7.5% minority stake in ADNOC Drilling on the Abu Dhabi Stock Exchange (ADX) through an IPO, demonstrating the continued growth, strength and prominence of Abu Dhabi’s financial market. ADNOC and H&P will continue to be loyal long-term shareholders of ADNOC Drilling.
John Lindsay, President and CEO of H&P, commented: “We are very pleased to establish a strategic alliance with ADNOC Drilling, and the alliance can create value for the company and stakeholders. Our investment in ADNOC Drilling is to implement our allocation of additional capital outside the United States. Another step in our international growth strategy proves our belief in what ADNOC Drilling and H&P can achieve together. We look forward to working with ADNOC and ADNOC Drilling to help us create similar value propositions for customers in the United States and other international regions.”
H&P’s cornerstone investment will be made at the IPO price and subject to a three-year lock-up period. As stated in the ADNOC Drilling prospectus, like other shareholders, H&P is expected to benefit from ADNOC Drilling’s commitment to a sound dividend policy. These rigs are expected to be delivered and commissioned in stages within 12 months, and accepted after successful completion of final inspections in accordance with customary terms and conditions.
The strategic alliance and cornerstone investment announced today represent the natural evolution of ADNOC’s value creation program and will provide ADNOC Drilling with a significant competitive advantage in the region, enabling it to further leverage its leading position as the largest national drilling company in the Middle East. Bench drilling rigs are almost twice as many as the second largest regional drilling supplier.
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