ADNOC Drilling recently reported record-breaking H1 2025 results, with significant revenue and profit growth driven by fleet expansion, accelerated production plans, and heavy investment in AI and technology.
The company’s revenue was up 30 per cent year-on-year to $2.37bn, EBITDA rising 19 per cent to $1.08bn, and net profit up 21 per cent to $692m.
Segment performance was robust: onshore revenue surged 18 per cent to $1bn, offshore edged up 1 per cent to $671m, and oilfield services exploded by 127 per cent to $689m.
In this discussion with Gulf Business, CFO Youssef Salem shares insights into the operational drivers behind the numbers, the company’s ambitious technology roadmap, and how ADNOC Drilling is positioning itself as a leader in sustainable, high-efficiency drilling across the Middle East and North Africa.
Salem outlines how strategic contract wins, disciplined capital allocation, and a focus on safety and innovation are shaping ADNOC Drilling’s trajectory for the rest of 2025 and beyond.
ADNOC Drilling reported a 30 per cent rise in revenue to $2.37bn and a 21 per cent rise in net profit for H1 2025. What were the key operational factors behind this bottom-line growth?
Several factors contributed to this strong financial performance. First, our rig fleet expanded rapidly in 2024 with more than 20 new rigs added. This half-year reflects the full financial impact of those additions. With recent acquisitions in Oman and Kuwait, our fleet now numbers around 149 rigs, making it one of the largest in the Middle East and North Africa.
Second, ADNOC has accelerated its production roadmap, aiming to reach five million barrels per day by 2027, moved forward from the original 2030 target. As the sole drilling provider in Abu Dhabi, this ramp-up means more drilling activity and additional oilfield services contracts. Our oilfield services segment has been the fastest-growing area, with over 100 per cent year-on-year growth.
Third, we’re unlocking new resources, especially in unconventional drilling. Last year, we secured a $1.7bn contract in this space, and in H1 2025, ADNOC Drilling completed more than 40 per cent of the wells under that programme.
We’re also delivering ahead of plan in both conventional and unconventional operations, thanks to adopting advanced technologies, including AI platforms that source and integrate global innovations locally to boost efficiency and financial returns.
On the technology side, what has ADNOC Drilling been focusing on in terms of adoption and investment?
Our technology strategy has three main verticals, all powered by AI.
AI-enabled rigs: We’re bringing six new offshore rigs between 2026 and 2028, all equipped with advanced automation and autonomous capabilities surpassing our current fleet. Meanwhile, we are retrofitting existing rigs with smart cameras that use computer vision to anticipate safety hazards — this improves safety and operational reliability.
Technology-enabled services: AI is transforming our existing services. For example, Measurement While Drilling now incorporates predictive analytics to forecast downhole events, enhancing decision-making. In directional drilling, autonomy reaches up to 95 per cent in some underground sections, allowing crews to work remotely and focus on higher-value tasks instead of repetitive, high-risk activities
Corporate-level AI: ADNOC has invested in Mirai, an AI “board observer” recently introduced to our board meetings. Mirai participates in discussions, helps moderate, and boosts strategic planning, execution tracking, and risk management.
How has investment in AI changed compared to five years ago?
It has increased dramatically. Our Enersol technology platform, which delivers automated drilling services, represents a $1.5bn joint venture investment, with ADNOC Drilling’s share being $765m.
Altogether, over $1bn is being committed to AI-enabled equipment and services over the next three years.
AI is not a side project — it’s embedded into our drilling assets, service offerings, and corporate processes. It’s critical for operational excellence, financial performance, safety, and meeting ADNOC’s national targets.
You secured $4.8bn in new contract awards in H1, a record for the company. How does this affect earnings visibility and CapEx plans?
The $4.8bn contract wins significantly improve earnings visibility and support our upgraded guidance for H2 2025. These awards reflect ADNOC’s accelerated plans, enabled by our technology investments.
In unconventional drilling, AI tools like NIRU and DrillOps, along with autonomous directional drilling, have cut well drilling times by up to 50 per cent, from 30 days down to 14 in some cases, enabling ADNOC Onshore to drill more wells without adding rigs.
We’re also deploying hybrid rigs powered by grid connections and battery systems, supporting ADNOC’s sustainability targets of reducing emissions by 25 per cent by 2030 and achieving net zero by 2045.
These initiatives align operational efficiency with environmental responsibility, strengthening our long-term client partnerships and contract prospects.
What returns do you expect from your Kuwait and Oman rigs once integrated?
We anticipate high-teens free cash flow yields, well above our current high single-digit yields, due to favourable transaction multiples — below four times EBITDA — and deal structures with earn-outs. This will help lift our ROE from 35 per cent into the high 30s.
What are the key execution risks or challenges that could impact this growth?
We focus on three areas:
- Future-proofing: The UAE’s competitive advantage lies in its low cost and emissions per barrel. We must maintain that edge through leading technology adoption, owning intellectual property, and sharing best practices across the region. Our Enersol platform, with over 140 patents, is crucial for technology sourcing.
- Sustainability: Balancing accelerated capacity expansion with emissions reduction demands continuous investment in low-emission services and operational efficiency.
- Safety: With more than 11,000 employees across over 140 rigs, safety is paramount. We leverage AI to predict and prevent incidents and use autonomous equipment for high-risk tasks to keep more personnel working safely in remote centres.
Oilfield services saw the fastest growth in H1. Are margins sustainable within the guided 22 to 26 per cent range?
Yes, margins remain above 22 per cent and are expected to stay within guidance. Our ability to offer integrated drilling and oilfield services packages is unique in the region, delivering efficiencies for clients and sustained profitability for us.
The unconventional segment is a major growth driver and has attracted major international investors, including EOG and Petronas, into UAE unconventional concessions, confirming the strong economics of these resources.
How do you balance shareholder returns with CapEx and expansion plans?
We declared two interim dividends in 2025, with $217m approved for Q1 and Q2 each, making ADNOC Drilling the only UAE company paying progressive quarterly dividends. Our policy is to grow dividends by at least 10 per cent annually over five years.
This is supported by record free cash flow generation. H1 free cash flow was around $727m — more than all of 2024 — with over 100 per cent conversion of net income to free cash flow. With a low leverage ratio of 0.9 times net debt to EBITDA, we have the balance sheet strength to invest over $1bn annually while sustaining dividends.
How do you manage such a wide remit across operations?
We use a decentralised but aligned operating model. Three SVP oversee onshore, offshore, and oilfield services. Each growth platform — like Turnwell and Enersol — has its own CEO accountable for operations, finances, and safety.
At the corporate level, our role is to drive synergies across platforms and identify new growth verticals. Ownership remains with each segment, with P&L fully allocated down to net income at segment level.
What are your top three leadership lessons?
People: Empowering leaders across every level, whether investor relations, finance, or operations, is essential.
Alignment: Clear “North Star” goals, like achieving $1.45bn net income this year and $5bn revenue next year, unite the organisation while maintaining safety as a non-negotiable priority.
Purpose: Balancing service to the nation’s energy goals with protecting shareholder value keeps us focused and motivated.
In such dynamic times, what should energy sector CFOs prioritise?
Resilience is key. In volatile markets, investors want stability and reliable execution. JPMorgan recently upgraded ADNOC Drilling, calling it “a raft in a sea of uncertainty.” We are also the most overweight stock in global emerging markets relative to the FTSE index and the most buy-rated company in MENA. Delivering resilience is everyone’s responsibility.
