UAE’s ADNOC Group offloads $935m stake in drilling unit

UAE’s ADNOC Group said on Thursday that it has divested $935m worth of shares in a secondary offering of its drilling unit, more than two years after it raised $1.1bn from an initial public offering (IPO).

The state energy firm offloaded 880 million shares at Dhs3.90 apiece, approximately 70 per cent above the IPO price of Dhs2.30 and represents a 5.6 per cent discount to the company’s closing share price of Dhs4.13 on Wednesday.

ADNOC will remain the majority shareholder in the company with a 78.5 per cent after the secondary share sale. It has agreed not to sell further shares in the drilling business for six months from the closing of the offering – subject to customary carve-outs.

“The significant interest our offering generated from both domestic and international investors is a testament to ADNOC Drilling’s growth trajectory since its IPO and its exciting future growth potential,” said Khaled Al Zaabi, group chief financial officer of ADNOC.

A higher free float is expected to pave the way for the drilling firm’s inclusion in the Morgan Stanley Capital International (MSCI) Emerging Market Index. The inclusion could happen at the next quarterly index review subject to ADNOC Drilling meeting criteria – which would diversify the company’s investor base.

FTSE Russell added the drilling firm to three of its global equity indices in October 2021 after the company’s listing on the Abu Dhabi Securities Exchange.

EFG Hermes, First Abu Dhabi Bank, Goldman Sachs Group and JPMorgan Chase were joint global coordinators and joint bookrunners on the offering.

Earlier in May, ADNOC Drilling secured a Dhs6.24bn contract to provide drilling and associated services to recover unconventional energy resources. The drilling firm incorporated a new company, Turnwell Industries, to service the contract and explore future opportunities in unconventional resources.

It also signed a term sheet with Schlumberger Middle East and Patterson-UTI International Holdings for future partnership and support with the latest technology, specialist services and innovations in the unconventional energy drilling space.

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