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Adnoc Drilling net profit surges 33% to $802 million in 2022

Outstanding operational growth drives financial year 2022 revenue to $2.67 billion, up 18% year-on-year; Highest-ever quarterly revenue of $733 million recorded in Q4, supported by new rigs joining the operational fleet

Adnoc Drilling Company on Monday announced that its annual net profit surged 33 per cent to $802 million last year as all segments achieved positive year-on-year performance that enabled the company to accelerate its production capacity target of five million barrels per day by 2027.

In a statement, the Abu Dhabi-listed company said its annual revenues climbed 18 per cent to $2.67 billion due to exceptional performance by the onshore and oilfield services (OFS) segments.

The energy giant achieved record revenue, earnings before interest, taxes, depreciation and amortisation (EBITDA) and net profit during the fourth quarter of 2022 as the company's bold fleet expansion programme delivered the highest-ever number of operational rigs – bolstering growth and charting a clear course for further expansion in 2023 and beyond.

World’s largest drilling operator

The company’s accelerated rig acquisition programme added 16 new drilling units in 2022, establishing one of the world’s largest drilling and well completion fleets consisting of 115 rigs.

In 2022, EBITDA stood firm at $1.23 billion, with a margin of over 46 per cent, as Adnoc Drilling made excellent progress on the delivery of further cost efficiencies while record net profit climbed to $802 million with 33 per cent year-on-year growth.

The company further noted that its highest-ever quarterly revenue generated in October-December 2022 quarter as it recorded 27 per cent year-on-year increase in revenue at $733 million. Similarly, EBITDA surged 35 per cent at $353 million and net profit soared 61 per cent to $234 million primarily due to new rigs entering the operational fleet.

“I am proud of the outstanding results that Adnoc Drilling has delivered over the past 12 months. In addition to record net profit of $802 million for the year, I am particularly pleased with the over $10 billion of contract backlog we were awarded in the year by our long-term, highly supportive customers," Abdulrahman Abdulla Al Seiari, chief executive officer of Adnoc Drilling, said.

He said these record results were enabled by our clear strategic objectives, the hard work of our highly-skilled and dedicated workforce, and our commitment to industry-leading health and safety standards.

"We are excited about the year ahead as we accelerate our business growth and build out our assets to enable Adnoc to realise its 2027 capacity targets, and we have released updated guidance accordingly,” he said.

Onshore: Revenue for the full year rose 27 per cent to $1.45 billion, principally due to new fleet additions. However, increase in drilling activity drove fourth-quarter revenue to $379 million, reflecting a growth of 29 per cent.

Offshore Jack-up: A three per cent increase in revenue at $611 million recorded in 2022, but the growth of the segment started accelerating towards the end of the year when new jackup rigs joined the operational fleet. It posted revenue of $180 million and EBITDA of $108 million, an increase of 23 per cent and 30 per cent, respectively, during the fourth quarter of 2022.

Offshore Island: Revenue stood firm at $204 million in 2022. but the fourth-quarter results showed 34 per cent year-on-year growth at $51 million. EBITDA decreased marginally, down five per cent year-on-year due to one-off revenue claims in 2021 for standby Island Rigs.

Oilfield Services (OFS): Annual revenue rose 23 per cent to $405 million while record quarterly revenue of $123 million was achieved in October-December quarter due to additional offshore un-conventionals activity during the quarter.

Adnoc Drilling also reported a fleet utilisation rate of 96 per cent for the year ending December 31, 2022, delivering exceptional revenue efficiency. Cash from operations increased 29 per cent to $1.52 billion supporting a free cash flow of $588 million.

Moreover, full year 2022 capital expenditure increased by 62 per cent to $942 million, as the company delivered on its ambitious plans to expand its fleet to meet customer demand.

Promising outlook

Adnoc Drilling also initiated its first-ever year-ahead guidance as it expects total revenue between $3 billion to $3.2 billion, which represents year-on-year growth of up to 20 per cent.

EBITDA is expected to remain in a range between $1.35 to $1.5 billion, with a very healthy margin of 45 per cent to 47 per cent.

"We also anticipate a new record net profit of $850 million to $1 billion, again continuing the growth from $600 million in 2021 to $800 million in 2022 and now to this new level in 2023," according to the company statement.

As per the company's year-ahead guidance, capital expenditure is forecast to be in a range of $1.3 billion to $1.75 billion this year.

"We plan to maintain our leverage ratio target below 2.0x. In light of the strong performance in 2022 and our progressive dividend policy, the final dividend for 2022 is expected to increase by a minimum of five per cent, in line with the highly competitive and progressive 5-for-5 dividend policy demonstrating a commitment to sustained value creation for shareholders," the statement said.

— muzaffarrizvi@khaleejtimes.com