Abu Dhabi National Oil Company (ADNOC) and Baker Hughes, a GE company (BHGE), will partner to turn ADNOC Drilling into “a fully-integrated drilling and well construction provider,” the companies said in a joint statement.
The deal calls for BHGE to buy a 5% interest in ADNOC Drilling for $550 million, placing the subsidiary’s value at $11 billion including $1 billion of net debt. BHGE will join ADNOC Drilling’s board of directors, and the two firms will create an advisory board to jointly oversee the partnership’s implementation and ongoing operations. The deal is expected to close in the fourth quarter.
The union marks the first time an international company has taken a direct equity stake in one of ADNOC’s service companies. BHGE will expand its presence in UAE, while ADNOC will gain access to BHGE technological expertise and proprietary equipment.
The partnership aims to “deliver more competitive well completion times, greater drilling efficiencies, and better well economics,” leveraging the improvements to seek “new business opportunities,” some of which may be abroad, the companies said.
As part of its 2030 growth strategy, ADNOC plans to ramp up its conventional drilling activity by 40% by 2025, with unconventional drilling also becoming a bigger priority. ADNOC intends to reduce drilling time by 30% by the end of next year.
ADNOC Drilling currently operates 60 land rigs, 20 jackup rigs, and 11 island rigs. It will remain the sole rig provider to ADNOC.
“We chose BHGE after a rigorous and competitive process as a partner with whom we have a longstanding working relationship and who shares ADNOC’s long-term vision and values,” commented Sultan Ahmed Al Jaber, UAE minister of state and ADNOC chief executive officer. ADNOC’s 2030 groupwide transition emphasizes strategic partnerships and co-investments.
BHGE currently employs more than 1,000 people in UAE.
GE during the summer stated its intention to spin off Baker Hughes into a separate company. The split is expected to occur over the next 2–3 years.