Baker Hughes acquires minority stake in Adnoc Drilling; to support its growth
The partnership represents the first time that Adnoc has brought an international strategic partner to acquire a direct equity stake in one of its existing services businesses. Adnoc Drilling is the largest drilling company in the Middle East and the sole provider of drilling rigs and associated services to the group. It also possesses decades of market experience and detailed knowledge of the UAE’s subsurface, enabling reduced risk in drilling activities.
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With more than 40 years of operations in the country, BHGE has deep domain expertise and a proven track record of solving complex drilling challenges through innovative technical solutions. Ongoing access and support from BHGE’s market-leading technology and equipment portfolio will help accelerate Adnoc Drilling’s ongoing growth and development of a broader product offering, including drilling and well completion services. This partnership structure aligns the interests of both Adnoc and BHGE in driving greater productivity and efficiency while increasing returns.
The partnership is expected to generate predictable, long-term revenue streams and growth in the market for both companies through a mutually beneficial, attractive commercial structure, pre-defined work plans and future dividends. Adnoc Drilling and BHGE will set up an advisory board with representation from both companies to oversee the implementation and ongoing operations, and BHGE will join Adnoc Drilling’s Board of Directors.
The two partners will be able to leverage Adnoc Drilling’s existing rig fleet capacity with limited capital expenditure outlay. The partnership will gain significant new business opportunities, including the potential to offer integrated drilling services beyond the UAE’s borders.
Dr. Sultan Ahmed Al Jaber, UAE Minister of State/Adnoc Group CEO, said: “We are very pleased to be partnering with BHGE in Adnoc Drilling, in line with our wise leadership’s guidance to create and enhance value across our business by forming strategic partnerships. We chose BHGE after a rigorous and competitive process as a partner with whom we have a long-standing working relationship and who shares Adnoc’s long-term vision and values.”
He went on to say, “The partnership forms an important building block of Adnoc’s 2030 smart growth strategy as we continue to drive operational efficiency and performance, and unlock even more value from every barrel we produce. The combined capabilities and expertise from this partnership will create greater drilling efficiencies and faster well completion times, generate attractive returns and enable the transfer of know-how and access to technology. Importantly, it will also drive job creation and economic growth, as well as maintain a healthy level of competition in the dynamic UAE oilfield services market.”
This partnership is another important step in Adnoc’s group-wide transformation and value-creation program, which addresses the evolving energy landscape. The Group’s transformation is supported by a new and expanded approach to strategic partnerships and co-investments as well as more proactive management of Adnoc’s portfolio of businesses and allocation of capital.
“We are very pleased to take a minority stake in Adnoc Drilling to jointly develop and further grow the company’s technical capabilities, market access and value. In a unique way, it allows us to drive predictable revenue streams and long-term growth for both companies and lets us invest in a stable, reliable and secure market environment. Supported by BHGE’s leading technology and service portfolio,” said BHGE Chairman/CEO Lorenzo Simonelli. “The transaction significantly increases our activity in the region and demonstrates our unique ability to create value for our customers and shareholders through innovative commercial arrangements, partnerships and leading technology solutions.”
The UAE is located in one of the world’s largest hydrocarbon super-basins with significant potential to tap its undeveloped reservoirs and further develop its existing resources. Realizing this potential, alongside the ongoing growth and development of Adnoc Drilling, will provide more opportunities for local third-party service providers to compete for and support Adnoc’s expanding integrated drilling and ancillary service requirements.
Today, BHGE employs more than 1,000 employees in the UAE and supports customers with products and services spanning the entire oil and gas value chain. BHGE will maintain its existing operations and footprint in Abu Dhabi and will continue to leverage its fullstream portfolio to serve Adnoc and other customers in the Middle East region.