ADNOC Drilling announces 2023 net profit of over $1 billion

ABU DHABI/ WAM

ADNOC Drilling Company PJSC today announced its financial results for the fourth quarter and full year ending 31st December 2023.
Revenue for the full year was US$3.057 billion, up 14 percent year-on-year, while EBITDA for the full year increased by 20 percent to US$1.483 billion with industry-leading EBITDA margin of 49 percent.
ADNOC Drilling announced that the net profit for the full year increased by 29 percent year-on-year to US$1.033 billion with a margin of 34 percent.
Abdulrahman Abdulla Al Seiari, Chief Executive Officer of ADNOC Drilling, commented, “Over the past twelve months we have further demonstrated the strength of our unique business model, that directly benefits from ADNOC’s five million barrel per day capacity target, and has delivered outstanding business growth and results. Our ambitious fleet expansion strategy coupled with the accelerated growth of Oilfield Services has delivered exceptional bottom line performance, beyond the expectations of the market. Looking ahead, ADNOC Drilling will remain dedicated to driving further efficiencies in our operational and financial performance, as we deliver enhanced value to our customers and shareholders.”
The company achieved record revenue, EBITDA and net profit during the fourth quarter of 2023, driven by the highest-ever number of operational rigs, bolstering growth and charting a clear course for further expansion in 2024 and beyond.
During the fourth quarter of 2023, ADNOC Drilling delivered quarterly revenue of US$841 million, up 15 percent year-on-year, EBITDA of US$424 million, up 20 percent, and net profit of US$329 million,up 41 percent.
The company added 14 new drilling units in 2023, including four lease-to-own land rigs, establishing one of the world’s largest owned and operated fleets consisting of 129 rigs.
ADNOC Drilling’s revenue for the year increased to US$3.06 billion, up 14 percent year-on-year. Revenue growth was driven primarily by the Offshore Jack-up and Oilfield Services (OFS) segments, increasing 31 percent and 37 percent respectively. All segments grew year-on-year as the company continues to execute on its fleet and OFS expansion strategy in support of the delivery of ADNOC’s production capacity target.
Full-year EBITDA was US$1.5 billion, with a margin of 49 percent, as the Company continues to make excellent progress on the delivery of cost efficiencies. Net profit for the twelve-month period
was a record US$1.03 billion, up 29 percent year-on-year.
• Onshore: Revenue for the full year was US$1.5 billion, up 3 percent year-on-year, due to the contribution of new rigs which more than offset lower reimbursement of cost escalation claims. 4Q23 revenue was up 10 percent to US$416 million, due to an increase in drilling activity.
• Offshore Jack-up: Revenue for the full year was US$800 million, a 31 percent increase compared to 2022, reflecting new jack-up rigs joining the operational fleet. 4Q23 revenue was US$225 million an increase of 25 percent due to higher activity.
• Offshore Island: Revenue for the full year increased by 2 percent versus 2022 to US$209 million, driven by mobilisation revenue for the re-activated island rig. 4Q23 revenue was US$52 million, up 2 percent compared to 4Q22, driven by increased activity.
• Oilfield Services (OFS): Revenue for the full year was US$553 million, an increase of 37 percent year-on-year on the back of increased activity volume across the entire portfolio.
4Q23 generated record quarterly revenue of US$148 million, driven by increased activity from pressure pumping, drilling fluids, and directional drilling.
ADNOC Drilling reported a fleet availability rate of 96 percent for the year ending December 31, 2023, delivering exceptional revenue efficiency. Cash from operations decreased 11 percent year-on-year to US$1.4 billion supporting a free cash flow of US$306 million. Full-year 2023 capital expenditure was as anticipated US$1,333 million, as the company delivered on its ambitious plans to expand its fleet to meet customer demand.
During the year, the company partnered with Alpha Dhabi Holding PJSC (Alpha Dhabi) to create Enersol, a strategic joint venture (JV) targeting value-accretive technology-enabled oilfield and energy service businesses globally across the OFS and energy value chain. The JV, of which the Company owns 51 percent of, underpins ADNOC Drilling’s market-leading position as an integrated drilling services provider, powering its growth and expansion strategy by coinvesting up to US$1.5 billion across OFS and energy sectors.
The Board of Directors recommends a final dividend payment of US$358 million for 2023 (8.22fils per share), subject to shareholder approval at the upcoming Annual General Meeting (AGM). The total dividend for 2023 equals to US$717 million (16.45 fils per share), representing a 5 percent year-on-year increase versus 2022. The final 2023 dividend is expected to be distributed in the first half of April 2024.
On the back of strong results, ADNOC Drilling announced its full year 2024 and medium-term guidance, reaffirming growth. The company continues to expect its owned rig count to total 142, including the 4 new lease-to-own land rigs, by the end of 2024.
The company expects total revenue between US$3.60 to US$3.80 billion, EBITDA of US$1.70 – US$1.90 billion, with a margin range of 48 percent – 50 percent and Net Profit of US$1.05 – US$1.25 billion, with a margin range of 30 percent – 33 percent. Moreover, ADNOC Drilling expects CapEx to be between US$0.75 – US$0.95 billion, while maintaining a leverage ratio “Net debt/EBITDA” below 2x in 2024, excluding material M&A.

ADNOC Drilling’s medium-term guidance is as follows:
– Revenue CAGR in the 12 percent – 16 percent range from 2023 base.
– EBITDA Margins around 50 percent with drilling margins exceeding 50 percent and OFS Margin in a range of 22 percent – 26 percent medium term.
– Conservative long-term leverage target of up to 2.0x net debt / EBITDA, excluding material M&A.
– Net working capital as percentage of revenue target of around 12 percent.
– Maintenance CapEx post-2024 of US$200 – US$250 million per annum.