This will support the development of ADNOC Drilling into a fully integrated drilling and well construction provider, with BHGE paying $550 million to acquire a 5% stake in this company.
ADNOC says the transaction values its drilling subsidiary at around $11 billion.
BHGE will be its exclusive provider of certain leading-edge equipment and technologies related to the integrated drilling offering, and the two companies will jointly pursue more competitive well completion times, greater drilling efficiencies and better well economics, also capitalizing on new business opportunities as ADNOC Drilling grows.
This is the first time ADNOC has allowed an international strategic partner to acquire a stake in one of its services businesses. ADNOC Drilling is said to be the largest drilling company in the Middle East and the sole provider of drilling rigs and associated services to ADNOC companies.
It also has long market experience and detailed knowledge of the UAE’s subsurface, which the NOC claims reduces risk in drilling activities.
BHGE brings more than 40 years of operational experience in the UAE, aside from its technical solutions, and the company’s technology and equipment portfolio should help speed up ADNOC Drilling’s development of a broader product offering, including drilling and well completion services.
The two parties plan to form an advisory board with representatives from both overseeing the implementation and ongoing operations, with BHGE individuals joining ADNOC Drilling’s board of directors.
ADNOC is looking to expand its conventional drilling activity 40% by 2025 and to increase 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 will target up to 30% of the local drilling and completion market over the next three years, with potential to offer integrated drilling services beyond the UAE’s borders.
BHGE chairman and CEO Lorenzo Simonelli said: “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.”
Currently the company employs more than 1,000 staff in the UAE.