Oil services provider Baker Hughes will pay $550 million for a five per cent stake in ADNOC Drilling, Abu National Oil Company’s drilling subsidiary.
Baker Hughes, a GE company, has signed a strategic partnership agreement with Abu Dhabi National Oil Company that will enable and support the growth and development of its subsidiary, ADNOC Drilling, into a fully-integrated drilling and well construction provider.
Baker Hughes will pay $550 million for a five per cent stake in ADNOC Drilling (profile), valuing the company at approximately $11 billion.
Baker Hughes will be the sole provider of certain proprietary leading edge and differentiated equipment and technologies related to the integrated drilling offering, supporting ADNOC Drilling’s growth.
Together, Abu Dhabi National Oil Company (profile) and Baker Hughes will deliver more competitive well completion times, greater drilling efficiencies and better well economics, and will capitalize on new business opportunities as ADNOC Drilling grows through its new expanded offering.
The partnership represents the first time that Abu Dhabi National Oil Company has brought an international strategic partner to acquire a direct equity stake in one of its existing services businesses.
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 is the largest drilling company in the Middle East and the sole provider of drilling rigs and associated services to ADNOC Group companies.
ADNOC Drilling also possesses decades of market experience and detailed knowledge of the UAE’s subsurface, enabling reduced risk in drilling activities.
ADNOC Drilling and Baker Hughes 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 partnership will enable Abu Dhabi National Oil Company to capture more value from every barrel of oil it produces as it plans to grow its conventional drilling activity by 40 percent by 2025 and substantially ramp up the number of its unconventional wells, in line with its 2030 smart growth strategy.
ADNOC Drilling will remain the sole rig provider to Abu Dhabi National Oil Company and capitalize on its growing upstream activity by deploying its new integrated offering to capture up to 30 percent of the drilling and completion market over the next three years, as it demonstrates increasing drilling efficiencies and improved customer service levels.
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.
H.E. Dr. Sultan Ahmed Al Jaber, UAE Minister of State and Abu Dhabi National Oil Company 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 Abu Dhabi National Oil Company’s long term vision and values. This unique partnership with BHGE comes at an important time in the drilling needs of Abu Dhabi as Abu Dhabi National Oil Company grows its conventional and unconventional hydrocarbon resources and as we see future potential for further regional growth. It will ensure we will be able to better service our upstream growth while capturing and retaining greater value.”
About ADNOC Drilling
Established in 1972, ADNOC Drilling provides drilling rigs and associated services to ADNOC Group companies. ADNOC Drilling is the largest drilling company in the Middle East, and operates an expansive fleet of rigs that includes 60 land rigs, 20 jackup rigs, and 11 island rigs, that drilled over 7,200 wells and more than 46.8 million feet. For more information, visit http://www.adnoc.ae/en/adnoc-drilling/.
About Baker Hughes
With more than 40 years of operations in the country, Baker Hughes has deep domain expertise and a proven track record of solving complex drilling challenges through innovative technical solutions. Today, Baker Hughes employs more than 1,000 people in the UAE and supports customers with products and services spanning the entire oil and gas value chain. For more information, visit http://www.BHGE.com/.