ADNOC Drilling signs $75m deal for six newbuild hybrid power land rigs

ADNOC Drilling, the Middle East region’s largest national drilling company by rig fleet size, has signed a $75m deal to acquire six newbuild hybrid power land rigs.

The rigs are being built by Honghua Golden Coast and will progressively enter the fleet from the second quarter of 2024, with partial revenue and earnings before interests, taxes, depreciation and amortisation (EBITDA) contribution from 2024 and full-year contribution from all rigs in 2025.

“With this new award and following an announcement in March detailing an agreement for 10 newbuild hybrid power rigs, ADNOC Drilling has ordered a total of 16 newbuild hybrid power land rigs year-to-date,” the company said in a bourse filing.

ADNOC Drilling said all these new rigs are part of the medium-term guidance to get to an owned-rig count of 142 by the end of 2024.

“The sixteen newbuild hybrid rigs ordered so far this year are central to ADNOC Drilling’s rigorous decarbonization strategy and our commitment to support ADNOC’s target to reduce greenhouse gas intensity by 25  by 2030, as well as the UAE Net Zero by 2050 strategic initiative,” said Abdulrahman Abdullah Al Seiari, CEO of ADNOC Drilling.

The rigs use a high-capacity battery and engine automation in parallel with the rigs’ traditional diesel generators. The hybrid power technology system stores energy in its batteries to use when there is a need for continuous power or to provide instant extra power when there is an increase in demand, reducing a rig’s greenhouse gas emissions by up to 15 per cent compared to a traditional rig.

The Abu Dhabi-based firm said each of the rigs will have the provision to be connected to the electrical grid with minimum adjustment, depending on rig location and the availability of grid power, further reducing emissions.

The drilling units are 750HP Fast Desert Moving design hybrid workover land rigs.

ADNOC Drilling’s growth strategy

Meanwhile, ADNOC Drilling secured a five-year $412m oilfield development contract to boost crude oil production capabilities at the Upper Zakum oil field from ADNOC Offshore in April.

The company’s revenues jumped 19 per cent to $716m in the first quarter of 2023, led by its onshore and oilfield services segments as the company accelerates UAE’s production capacity target of five million barrels per day (bpd) by 2027.

“Revenue growth was achieved across all segments, with offshore jack-up and oilfield services leading the way, increasing 28 per cent and 43 per cent respectively,” ADNOC Drilling said in a statement.

Its EBITDA reached $33M in Q1 2023, a 19 per cent year-on-year increase compared to the same period a year earlier. During the quarter, the company signed an MoU with Masdar to explore geothermal energy opportunities to advance the UAE’s transition to clean sources.

The Abu Dhabi-based firm maintained its strong guidance for 2023, with revenue projected at between $3bn and $3.2bn, representing year-on-year growth of up to 20 per cent. It is expecting a record net profit in 2023 of $850m to $1bn in the same period.

ADNOC Drilling projected capital to be in the $1.3 – $1.75bn range in 2023.

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