BHGE acquires 5% stake in ADNOC Drilling
The deal values ADNOC Drilling at $11bn.
ADNOC and Baker Hughes, a GE company (BHGE), today signed a strategic partnership agreement giving BHGE a 5% stake in ADNOC Drilling, valued at $11bn.
BHGE will be the sole provider of certain proprietary leading-edge and differentiated equipment and technologies related to integrated drilling, supporting ADNOC Drilling’s 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 ADNOC Group Companies.
"This unique partnership with BHGE comes at an important time in the drilling needs of Abu Dhabi as ADNOC grows its conventional and unconventional hydrocarbon resources and as we see future potential for further regional growth," said H.E. Dr. Sultan Ahmed Al Jaber, UAE Minister of State and ADNOC Group CEO. "It will ensure we will be able to better service our upstream growth while capturing and retaining greater value."
Ongoing access and support from BHGE’s technology and equipment portfolio are expected to accelerate ADNOC Drilling’s growth and development of a broader product offering, including drilling and well completion services.
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.
"Supported by BHGE’s leading technology and service portfolio, ADNOC Drilling will enable ADNOC to unlock significant value from their untapped resources, while building local capabilities and accelerating overall market growth,” said BHGE Chairman and Chief Executive Officer 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 partnership follows ADNOC's plans to grow its conventional drilling activity by 40% 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 ADNOC Group Companies and capitalize on ADNOC’s growing upstream activity by deploying its new integrated offering to capture up to 30% of the drilling and completion market over the next three years.
“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," Al Jaber said. "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.”