ADNOC Drilling Beefs Up Hybrid Land Rig Fleet

ADNOC Drilling Company PJSC announced recently that it has signed a $75 million agreement for the purchase of six newbuild hybrid power land rigs.

The rigs will progressively enter the fleet from the second quarter of 2024, “with partial revenue and EBITDA contribution from 2024 and full year contribution from all rigs in 2025”, ADNOC Drilling outlined. Honghua Golden Coast will build the rigs, ADNOC Drilling revealed.

In its announcement, ADNOC Drilling highlighted that it has ordered a total of 16 newbuild hybrid power land rigs so far in 2023. All of these are part of the medium-term guidance to get to an owned rig count of 142 by the end of 2024, the company noted.

According to its website, ADNOC Drilling’s rig fleet has grown fourfold in 22 years. It currently stands at 115, increasing from 108 in 2022, 96 in 2021, 93 in 2020, 52 in 2014, and 25 in 2000, a chart on the company’s site shows. ADNOC Drilling has 74 land rigs, 31 offshore rigs, and 10 island rigs, its site highlights.

“As we implement our bold fleet expansion plan, we are working to ensure that growth comes with the delivery of our decarbonization commitments,” Abdulrahman Abdullah Al Seiari, the Chief Executive Officer of ADNOC Drilling, said in a company statement. 

“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 percent by 2030, as well as the UAE Net Zero by 2050 strategic initiative,” he added.

The rigs use a high-capacity battery and engine automation in parallel with traditional diesel generators, ADNOC Drilling outlined in the announcement. 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 percent compared to a traditional rig, the company noted.

Back in March this year, ADNOC Drilling announced that it had signed an agreement to purchase ten newbuild hybrid power land drilling rigs for a total of $252 million. 

In its March announcement, ADNOC Drilling noted that the new rigs were central to increasing its operational onshore capacity and a direct response to ADNOC’s accelerated production capacity targets. The company stated at the time that it is a key enabler of ADNOC’s accelerated production capacity targets of five million barrels of lower carbon intensity crude per day by 2027 and achieving gas self-sufficiency for the UAE.

“This is yet another exciting step for ADNOC Drilling – these new rigs contribute to the capacity required to meet our customers’ expectations of maximum energy with minimal emissions,” Al Seiari said in a company statement in March.

“As our growth trajectory accelerates and we continue to build our capacity and capabilities to drive shareholder returns, our commitment to the decarbonization of our operations remains fundamental,’’ he added.

In December last year, ADNOC Drilling announced that it had signed an agreement to acquire an additional two “premium high-specification” Gusto MSC CJ46-X100-D design offshore jack-up drilling units. These rigs had a combined cost of $200 million, the company highlighted at the time.

In November 2022, ADNOC Drilling revealed that it had signed an agreement to acquire three “brand new high-specification” offshore jack-up drilling units. The rigs had a combined cost of $320 million, ADNOC Drilling pointed out.

Last month, ADNOC Drilling announced “strong” first quarter 2023 year on year earnings growth, which it said was driven by an “accelerated rig fleet and service offering expansion”.

The company highlighted in its first quarter results statement that its net profit increased by 25 percent year on year, “supported by increased activity coupled with improved operational efficiencies”, and that its revenue growth of 19 percent year on year was “enabled by new rigs entering the operational fleet in second half of 2022”.

ADNOC Drilling reported net profit of $219 million in the first quarter of this year, compared to net profit of $175 million in the first quarter of 2022, and revenue of $716 million in the first quarter of 2023, compared to revenue of $601 million in the first quarter of last year.

“Our first quarter results are particularly pleasing as they clearly demonstrate the effective execution of our strategy, to grow earnings by expanding our fleet and our offering, for the benefit of our customers and our shareholders,” Al Seiari said in ADNOC Drilling’s first quarter results statement.

“To maximize value for shareholders now and into the future, we will continue to secure high-quality, long-term contracts that offer superb future earnings visibility, as well as protection against market volatility,” he added.

“At the same time, we will maintain our focus on operational excellence and sustainable operations, as well as capitalize on our unique position within the market as we remain firmly on track to deliver our 2023 guidance,” Al Seiari continued.

To contact the author, email andreas.exarheas@rigzone.com