ADNOC AND BHGE AGREE TO FORM STRATEGIC PARTNERSHIP
Abu Dhabi National Oil Company (ADNOC) and Baker Hughes, a GE company have signed a strategic partnership agreement, that will enable and support the growth and development of ADNOC’s subsidiary, ADNOC Drilling, into a fully-integrated drilling and well construction provider. As part of the agreement, BHGE will acquire a five percent stake in ADNOC Drilling. The transaction values ADNOC Drilling at approximately $11 billion. BHGE 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, ADNOC and BHGE 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 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. ADNOC Drilling also possesses decades of market experience and detailed knowledge of the UAE’s subsurface, enabling reduced risk in drilling activities. With more than 40 years of operations in the country, BHGE has deep domain expertise and a proven track record of solving complex drilling challenges through innovative technical solutions. Ongoing access and support from BHGE’s market-leading technology and equipment portfolio will help accelerate ADNOC Drilling’s ongoing growth and development of a broader product offering, including drilling and well completion services.
The partnership will enable ADNOC 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 ADNOC Group Companies and capitalize on ADNOC’s 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. (Source and image: ADNOC/Rig workers on ADNOC drilling rig)