ADNOC Drilling Purchases Three High-Specification Jack-Up Rigs

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ADNOC Drilling Purchases Three High-Specification Jack-Up Rigs to Deliver on Ambitious Growth Strategy
November 21, 2022

• Three new premium offshore jack-up rigs acquired for $320 million to meet ADNOC’s plan to raise and sustain production capacity

• Purchase reinforces accelerated rig fleet expansion program, with further acquisitions in the pipeline

• Acquisition of high-specification offshore rigs cements ADNOC Drilling’s position as owner of one of the largest operating offshore jack-up fleets in the world

ADNOC Drilling Company PJSC (ADNOC Drilling or “the Company”) (ADX symbol: ADNOCDRILL / ISIN: AEA007301012) today announced that it has signed an agreement to acquire an additional three brand new high-specification offshore jack-up drilling units (the “rigs”). The cost of the acquisition is part of the Company’s three-year guidance on capital expenditure and its strategic growth plans.

The acquisition underpins the company’s accelerated fleet expansion and enterprising growth strategy. Earlier sale and purchase agreements were signed on 30 May (for two rigs), 10 June (one rig) and 24 August (one rig). The latest three rigs have a combined cost of $320 million and are premium high-specification jack-up rigs.

Abdulrahman Abdullah Al Seiari, Chief Executive Officer of ADNOC Drilling, commented: “We continue to execute our bold growth strategy as a key enabler of ADNOC’s ambitious production capacity targets. The latest acquisition of these premium rigs will be central to our success, and cement our position as one of the world’s largest jack-up rig fleet owners, as we strive to significantly boost revenues and shareholder returns over the coming years.”

As the Company’s new rigs progressively enter the fleet, ADNOC Drilling expects a further boost to its financial and operating performance to the benefit of its clients, shareholders and the UAE.

Since listing on the Abu Dhabi Securities Exchange in October 2021, ADNOC Drilling has rapidly expanded its fleet from 95 to 108 owned rigs, as of 30 September 2022. With the addition of the latest three high-specification rigs the Company will operate one of the largest offshore jack-up fleets in the world, with 30 rigs, and plans further growth in the short term. ADNOC Classification: Public ADNOC Drilling continues to demonstrate strong and resilient growth combined with a sustainable and progressive dividend policy. In the nine months to 30 September 2022, the Company delivered revenue of $1.94 billion, a 15% increase year-on-year, with $568 million in net profit – a 24% increase

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24 Nov 2022
Keppel O&M delivers first of three jackup rigs novated by Borr Driling to ADNOC Drilling
Payment of approximately US$160 million received on delivery of first jackup rig.

Keppel Offshore & Marine Ltd (Keppel O&M), through its wholly-owned subsidiary Keppel FELS Limited (Keppel FELS), has delivered the first of three jackup rigs to ADNOC Drilling Company PJSC (ADNOC Drilling).

The three rigs were part of a series of five rigs that Keppel FELS had been building for Borr Drilling. As set out in Keppel’s announcement dated 12 October 2022[1], Keppel O&M entered into an agreement with Borr Drilling and certain of its subsidiaries to, among other things, accelerate the delivery of three jackup rigs to Borr Drilling (or a third party whom Borr Drilling intends to sell the rigs to) between October 2022 and July 2023. The construction contracts for the three rigs have since been novated by Borr Drilling to ADNOC Drilling, and this is the first of three rigs to be delivered to ADNOC Drilling.

Keppel O&M has received a full payment of approximately US$160 million having delivered the first rig. As part of the novation agreement, Keppel O&M will also receive full payments for each of the two remaining rigs on delivery. Keppel O&M expects to receive at least US$352 million for all three rigs between 2022 and 2023. This is in addition to down payments Keppel O&M had initially received from the previous customers for the rigs[2].

Mr Tan Leong Peng, Managing Director (New Builds) of Keppel O&M said, “We are pleased to support ADNOC Drilling in the growth of their rig fleet and drilling operations with the delivery of the first of three newbuild rigs. Keppel O&M stands ready to support our customer with additional modification services as they prepare their rigs for deployment.

“With the novation of the three jackup contracts to ADNOC Drilling, we have even greater certainty of delivering these rigs, receiving more cash payments sooner, and reducing Keppel O&M’s financial exposure to the legacy assets.

“Our high quality and cost-effective KFELS B Class family of rigs have a strong track record in the Middle East. Since the start of 2022, all nine of our proprietary jackup rigs have been contracted for deployment in the Middle East. As drilling rig utilisation rates continue to increase, we are seeing more demand for high quality rigs that our legacy rigs are well suited to meet.”

The KFELS B Class family of designs are the industry benchmark for jackup rigs. It has proven its robustness and efficiency in many fields around the world over the years, including in the Middle East.

This first rig delivered is built to the KFELS Super B Class design, which is capable of operating in water depths of over 400 feet, drilling to depths of 35,000 feet, and drilling deep wells both vertically and horizontally. It will be equipped with an advanced and fully-automated high capacity rack and pinion jacking system, Self-Positioning Fixation System, and also has accommodation with full amenities for 150 persons.

As part of the definitive agreements Keppel Corporation has signed in connection with the proposed Offshore & Marine transactions[3], these rigs are part of Keppel O&M’s legacy rigs, and such rigs as well as any sales proceeds, will be transferred to Asset Co that is majority-owned by external investors on legal completion.

The abovementioned transaction will not have any material impact on the net tangible assets and earnings per share of Keppel Corporation Limited for the financial year ending 31 December 2022.