ADNOC Drilling Expands Its Horizons with Strategic Acquisition of MB Petroleum Services
In a significant move to broaden its influence in the Gulf region’s oil and gas sector, ADNOC Drilling announced on Wednesday that it will acquire an 80% stake in MB Petroleum Services, a prominent provider of drilling and oilfield services. This transaction, valued at an enterprise total of 4 million (approximately 749 million dirhams), represents a strategic step in ADNOC Drilling’s ongoing expansion efforts across the Middle East.
MB Petroleum Services operates predominantly in Oman and Kuwait, adding depth to ADNOC’s existing portfolio. This acquisition marks ADNOC Drilling’s second major venture into regional markets, following their recent acquisition of SLB’s offshore rig operations in Oman and Kuwait. The strategic alignment of capabilities between ADNOC Drilling and MB Petroleum Services is expected to enhance operational efficiency and bolster the overall service offerings in an increasingly competitive market.
Youssef Salem, the Chief Financial Officer of ADNOC Drilling, emphasized the significance of this deal, remarking that such acquisitions provide a “blueprint for future growth.” This sentiment underscores ADNOC Drilling’s commitment to pursuing strategic opportunities that will amplify its footprint across key Gulf states such as Oman, Kuwait, Saudi Arabia, and Bahrain.
The acquisition includes a total of 21 operational rigs, comprising 13 located in the strategically vital territories of Oman and Kuwait, and an additional four rigs situated in Bahrain. This portfolio of rigs is anticipated to not only enhance production capabilities but also generate robust earnings and cash flow. According to Salem, the rigs come with an impressive backlog valued at 0 million, a figure that notably exceeds the cost incurred during the acquisition process. Furthermore, these rigs are operated under long-term agreements that extend as far into the future as 2033, suggesting a stable revenue stream for ADNOC Drilling.
The broader context for this acquisition reveals a bustling landscape for drilling activities in the Gulf region. During an interview at the Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC), Salem noted that despite facing pressures in oil pricing, the drilling activities in the UAE, Oman, and Kuwait are witnessing unprecedented levels of activity. He also highlighted that Saudi Arabia’s markets appear to be “on the rebound,” signifying a potential upswing in investments and operations across the region.
From a financial perspective, Salem provided insights into the valuation metrics associated with the deal, indicating that it was assessed at less than four times the company’s core earnings before interest, taxes, depreciation, and amortization (EBITDA). Additionally, the acquisition boasts a free cash flow yield exceeding 10% and an internal rate of return projected to surpass 15%. Such metrics are indicative of a sound investment, enhancing both shareholder value and financial sustainability for ADNOC Drilling.
The transaction is expected to finalize in the first quarter of 2026, pending the requisite regulatory approvals, signaling a cautious yet optimistic approach to corporate expansion in a complex regulatory environment. The potential for growth in the Gulf’s oil and gas sector remains robust, despite the inevitable fluctuations in oil prices, indicating that strategic positioning will be indispensable in navigating future challenges.
As ADNOC Drilling moves forward with this acquisition, it stands to set a precedent for future transactions in the sector, reflecting an industry trend towards consolidation and strategic collaboration. By augmenting its operational capabilities and expanding its geographical reach, ADNOC Drilling not only reinforces its competitive edge but also contributes to the broader economic landscape of the Gulf region, where oil and gas continue to serve as key drivers of growth.
In conclusion, ADNOC Drilling’s acquisition of a stake in MB Petroleum Services is a significant indicator of the company’s trajectory and an affirmation of its commitment to sustained growth in a dynamic environment. As the region continues to evolve, such strategic moves will be critical in shaping the future of the oil and gas sector across the Gulf.
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