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ADNOC DRILLING COMPANY P.J.S.C.
First Quarter 2023 Earnings
Management Discussion & Analysis Report
May 11, 2023
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Table of Contents
Financial Highlights 3
Operational Highlights 11
Outlook 13
Dividend Policy 14
Earnings Webcast and Conference Call 15
Share Price and Ownership 15
Appendix: Glossary 16
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Financial Highlights
Financial Summary
ADNOC Drilling Company P.J.S.C. (“ADNOC Drilling” or the “Company”) announced a robust
performance in the first quarter ending March 31, 2023, with revenue amounting to $716 million in
the period, up 19% year-on-year from $601 million. Sequentially, the quarter was impacted by two
less operating days and less of an impact from cost escalation claim reimbursements when
compared with the fourth quarter of 2022.
A strong top line performance translated into EBITDA of $333 million and net profit of $219 million,
an increase of 19% and 25% respectively over the prior year. ADNOC Drilling continues delivering
a strong EBITDA margin of 47%, flat year-on-year, while the net profit margin increased to 31% in
the first quarter of 2023 from 29% in the year-ago period.
Free cash flow generated in the first quarter stood at $153 million, a decrease from $535 million in
the same period last year which significantly benefited from the resolution and collection of long
overdue receivables.
ADNOC Drilling continues to capitalize on its unique position as a critical enabler of ADNOC’s plans
to responsibly accelerate production capacity growth to 5 million barrels per day by 2027, as global
demand for energy continues to rise. The Company’s first quarter performance was attributable to
the full operational impact of eight world-class H&P FlexRigs© which were delivered and
commissioned in stages over the course of 2022 and five newly purchased jack-up rigs which went
into operation over the course of the second half of 2022. Overall, the rig fleet remained flat from the
prior reporting period at 115 owned rigs with a fleet availability of 95%.
USD Million 1Q23 1Q22 YoY % 4Q22 QoQ %
Revenue 716 601 19% 733 -2%
Opex1 (383) (321) 19% (380) 1%
EBITDA2 333 280 19% 353 -6%
Depreciation and amortization (102) (101) 1% (110) -7%
Finance cost - net (12) (4) 200% (9) 33%
Net Profit 219 175 25% 234 -6%
EBITDA Margin 47% 47% 0% 48% -2%
Net Profit Margin 31% 29% 1% 32% -1%
Cash generated from operating
226 613 -63% 389 -42%
activities
Capital Expenditure3 (76) (78) -3% (434) -82%
Free Cash Flow 153 535 -71% (42) NM
Total Equity 3,150 2,970 6% 2,931 7%
Net debt4 1,077 556 94% 1,214 -11%
Earnings per Share ($) 0.014 0.011 25% 0.015 -6%
Capital employed 4,827 4,605 5% 4,610 5%
Return on capital employed 18% 15% 3% 16% 2%
Net debt to LTM EBITDA 0.8 0.5 0% 1.0 0%
Leverage ratio 25% 16% 10% 29% -4%
Return on equity 27% 23% 4% 24% 3%
NM = Not Meaningful
(1) Opex includes allocation of G&A expenses and other income
(2) EBITDA represents Earnings Before Interest, Tax, Depreciation and Amortization
(3) Payments for purchase of property and equipment including prepaid delivery payments
(4) Interest bearing liabilities less cash and cash equivalents
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Segmental Results
Onshore
USD Million 1Q23 1Q22 YoY % 4Q22 QoQ %
Revenue 355 319 11% 379 -6%
OPEX1 (182) (166) 10% (191) -5%
EBITDA2 173 153 13% 188 -8%
Net Profit 127 113 12% 145 -12%
(1) Opex includes allocation of G&A expenses and other income
(2) Underlying EBITDA includes other income
Year-on-Year Performance
Onshore revenue was up 11% to $355 million from $319 million in the year-ago period. The increase
was mainly attributable to growth in drilling activity driven by the addition, and full contribution over
the period, of the eight H&P rigs acquired and put into operations over the course of 2022.
Operating expenses were up 10% to $182 million in the first quarter of 2023 from $166 million in the
prior year period. The increase in operating expenses grew in-line with the rig fleet expansion
coupled with inflationary pressures associated with the rise in year-on-year diesel costs.
We continue to seek out and identify areas where we can realize efficiencies and offset increasing
cost. In addition to the initiative to optimize the number of crew on each rig, which we expect to
translate to a reduction in our incremental manpower per new rig in 2023, we are exploring additional
opportunities to reduce diesel consumption and optimize equipment rentals.
Despite the increase in operating expenses, Onshore delivered $173 million in EBITDA, an increase
of 13% from $153 million in the prior year. As explained above, the jump was largely attributable to
incremental drilling activity.
Sequential Performance
Onshore revenue decreased 6% sequentially to $355 million in the first quarter of 2023 from $379
million. The impacts in the period were:
(i) Two less calendar days leading to lower operating activity in the period
(ii) The fourth quarter of 2022 benefitted more than the current period from reimbursement
of cost escalation claims, particularly on diesel prices.
Operating expenses decreased by 5% to $182 million in the period from $191 million in the fourth
quarter, which was in-line with the decrease in diesel prices. Additionally, the Company’s allocation
of overhead expenses to the various segments were re-assessed in the first quarter, following our
policy, which ultimately resulted in slightly lower cost allocation to the Onshore segment relative to
the other segments. As a result, segmental EBITDA decreased by 8% quarter-on-quarter to $173
million from $188 million.
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Offshore Jack-up
USD Million 1Q23 1Q22 YoY % 4Q22 QoQ %
Revenue 184 144 28% 180 2%
OPEX1 (79) (59) 34% (72) 10%
EBITDA2 105 85 24% 108 -3%
Net Profit 62 44 41% 60 3%
(1) Opex includes allocation of G&A expenses and other income
(2) Underlying EBITDA includes other income
Year-on-Year Performance
The Offshore Jack-up segment delivered a 28% increase in revenue to $184 million in the period
from $144 million in the same period a year ago. The increase was largely attributable to the full
contribution in the quarter of five new jack-up rigs that went into operations over the course of 2022.
This was partly offset by one rig undergoing major maintenance and exceeding its allocation of
maintenance days, which in turn led to a loss of day rate for the majority of the quarter.
Segmental operating expenses rose 34% to $79 million in the first quarter, up from $59 million a
year-ago due to the increased size of the rig fleet, the impact of inflation on maintenance activity in
the period and costs related to the rig which underwent major maintenance. Major maintenance
activity on jack-ups in fiscal year 2022 commenced in the second quarter and went through the end
of the year. In addition, in order to streamline the process of new rigs joining the fleet, the Company
started to incur pre-operating costs in anticipation of the acquisition of new jack-ups.
Despite the increase in operating expenses, EBITDA increased to $105 million in the first quarter of
2023. This 24% increase from $85 million in the prior year was attributable to the increase in drilling
activity associated with the five new jack-ups that commenced operations in 2022.
Sequential Performance
First quarter revenue increased a marginal 2% to $184 million from $180 million sequentially due to
a full quarter of day rate contribution from two jack-ups that were integrated into operations during
the fourth quarter. This was partially offset by a lower number of operating days in the first quarter.
Operating expenses increased $7 million, or 10% quarter-on-quarter, to $79 million from $72 million.
This was in-line with the increase in rig activity levels coupled with a slight increase in routine repair
and maintenance expenses. The segment was also impacted by the previously mentioned policy for
overhead cost allocations, which ultimately resulted in higher cost allocation to the Offshore Jack-
up segment. This impacted EBITDA in the period, leading to a sequential decrease of $3 million, or
3% to $105 million from $108 million in the prior quarter.
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Offshore Island
USD Million 1Q23 1Q22 YoY % 4Q22 QoQ %
Revenue 51 50 2% 51 0%
OPEX1 (19) (22) -14% (23) -17%
EBITDA2 32 28 14% 28 14%
Net Profit 20 16 25% 15 33%
(1) Opex includes allocation of G&A expenses and other income
(2) Underlying EBITDA includes other income
Year-on-Year Performance
Offshore Island revenue witnessed a marginal year-on-year increase to $51 million from $50 million.
The move was largely attributable to mobilization revenue for the re-activated island rig which has
been allocated to the Hail and Ghasha Project.
Segmental EBITDA increased from $28 million in the prior-year period to $32 million in the first
quarter of 2023 due to a number of cost efficiency measures which include price negotiations on
consumables and spare parts.
Sequential Performance
Overall activity was flat quarter-on-quarter with revenue totaling $51 million in both quarters. The
lower number of operating days in the current period were offset by the previously mentioned
mobilization revenue.
EBITDA increased by 14%, or $4 million, to $32 million from $28 million in the quarter as a result of
the previously mentioned cost efficiency measures coupled with a decrease in overhead costs
allocated to the segment, following our policy.
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Oilfield Services
USD Million 1Q23 1Q22 YoY % 4Q22 QoQ %
Revenue 126 88 43% 123 2%
OPEX1 (103) (74) 39% (94) 10%
EBITDA2 23 14 64% 29 -21%
Net Profit 10 2 400% 14 -29%
(1) Opex includes allocation of G&A expenses and other income
(2) Underlying EBITDA includes other income
Year-on-Year Performance
The Oilfield Services segment continues to deliver strong top-line growth posting $126 million in the
first quarter of 2023, a 43% increase from the same period a year ago. This was attributable to
increased activity volume across the entire portfolio. The number of Integrated Drilling Services
(“IDS”) rigs increased from 36 rigs in the year-ago period to 40 rigs in the current period.
Operating expenses increased 39% year-on-year to $103 million from $74 million, mainly due to a
significant increase in activity levels, along with an inflationary trend on cost of materials, equipment
and associated logistic costs. Moreover, part of the increase was due to equipment hire tied to
increased frac activity.
EBITDA increased 64% from $14 million in 2022 to $23 million in the current period, reflecting
increased activity volumes across the segment partially offset by the activity mix. The EBITDA
growth offset in activity mix related specifically to our Drilling and Completion Fluid business which
was the most impacted by increasing material costs.
Sequential Performance
Revenue increased 2% quarter-on-quarter to $126 million from $123 million, mainly due to the
Directional Drilling and Drilling Fluids product line activity levels which were in-line with increased
offshore drilling activity and the launch of the Hail and Ghasha project.
Operating expenses increased 10% in the period to $103 million from $94 million, primarily driven
by inflationary pressures on various material costs and increased equipment hire in relation to our
frac activity. The segment was also impacted by the previously mentioned change in overhead cost
allocations. Since inception, overhead costs were not allocated to the OFS segment as it was
undergoing an expansionary phase.
As a result of the increased operating expenses and overhead costs, reported EBITDA decreased
21% to $23 million in the first quarter versus $29 million in the year-ago period.
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Operating Working Capital
USD Million 31 Mar 23 31 March 22 YoY % 31 Dec 22 QoQ %
Current Assets1 1,091 1,135 -4% 1,197 -9%
Inventories 190 180 6% 153 24%
Trade & other receivables 115 106 8% 115 0%
Due from related parties 786 849 -7% 929 -15%
Current Liabilities2 649 850 -24% 883 -27%
Trade & other payables 396 331 20% 416 -5%
Due to related parties 253 519 -51% 467 -46%
Operating Working Capital 442 285 55% 314 41%
(1) Excludes cash and bank balances
(2) Excludes lease liabilities
See Appendix 1 (Glossary) for the calculation of certain metrics referred to above.
Operating working capital ended the period at $442 million, increasing both year-on-year and
sequentially. The year-on-year trend was mainly driven by increased activity levels and lower
periodic collections which last year were higher due to resolution and collection of long overdue
receivables.
The quarter-on-quarter change was due to an increase in related party balances and inventories,
with the latter supporting the expected acceleration in the business in the second half of the year.
This represented a rise in net working capital as a percentage of revenue to 15% at the end of the
first quarter.
As the Company growth plans materialize, the evolving business mix leads to structural increases
in working capital. Despite this trend, the Company continues to expect further improvements in
working capital to reach the target of 10% - 11% of revenue.
Free Cash Flow
USD Million 1Q23 1Q22 YoY % 4Q22 QoQ %
Cash generated from operating
226 613 -63% 389 -42%
activities
Cash used in investing activities (73) (78) -6% (431) -83%
Free Cash Flow 153 535 -53% (42) NM
NM = Not Meaningful
See Appendix 1 (Glossary) for the calculation of certain metrics referred to above.
Free cash flow stood at $153 million in the first quarter, a 53% decrease from $535 million in the
prior year.
The decrease was mainly attributable to the resolution and collection of long overdue receivables in
the first quarter of 2022. Moreover, the decrease was also driven by increasing working capital
balances, which have grown along with the increased activity levels.
Free cash flow increased from negative $42 million in the fourth quarter of 2022 to $153 million in
the current period mainly due to a decrease in capital expenditures in the first quarter of 2023. CapEx
in the period was in-line with anticipated payment plans for rig acquisitions.
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Balance Sheet
USD Million 31 Mar 23 31 Mar 22 YoY % 31 Dec 22 QoQ %
Total Assets 5,476 5,483 0% 5,493 0%
Non-current assets 3,911 3,365 16% 3,970 -1%
Current Assets1 1,091 1,135 -4% 1,197 -9%
Assets Held for sale 11 - 100% - 100%
Cash and cash equivalents 463 983 -53% 326 42%
Total Liabilities 2,326 2,513 -7% 2,562 -9%
Non-current liabilities 143 1,635 -91% 160 -11%
Current liabilities 2,183 878 149% 2,402 -9%
Total Equity 3,150 2,970 6% 2,931 7%
Share capital 436 436 0% 436 0%
Statutory reserve 140 60 133% 140 0%
Retained earnings 2,574 2,474 4% 2,355 9%
Total Equity and Liabilities 5,476 5,483 0% 5,493 0%
(1) Excludes cash and bank balances
Total Assets for the period ending March 31 decreased marginally to $5,476 million from $5,483
million in the year-ago period. This was mainly due to an increase in non-current assets by 16% to
$3,911 million from $3,365 million on the back of the new rig acquisitions associated with our fleet
expansion program.
The increase in non-current assets in the first quarter was offset by a decrease in cash and cash
equivalents balance to $463 million from $983 million in the year-ago period due to planned rig
purchases tied to ADNOC Drilling’s fleet expansion plans. As of March 31, 2023, the Company’s
cash headroom (unutilized syndicated term and revolving facilities) amounted to $1,713 million.
Total liabilities decreased by 7% to $2,326 million at the end of the first quarter from $2,513 million
in the prior year period. The change was mainly due to a decrease in non-current liabilities from
$1,635 million a year-ago to $143 million in the current period offset by a corresponding increase in
current liabilities from $878 million a year-ago to $2,183 million in the same periods respectively.
As disclosed in the prior reporting period, the utilized syndicated loan of $1,500 million has been
reclassified from a non-current liability to a current liability as the facility will mature in less than 12
months. The Company intends to put another facility in place which would replace the existing debt
before maturity. Excluding the reclassification of the loan facility, current liabilities decreased due to
related party balances which have grown in-line with the Company’s increased activity levels.
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Capital Expenditure
Capital expenditure (CapEx), including prepayments, totaled $76 million for the period ending March
31, 2023, in-line with payment plans for our rig fleet expansion program. Pre-payments in the period
were mostly associated with the purchase of offshore jack-up rigs.
Rig purchases are usually spread out over at least two milestones with the first payment at signing
of the sale and purchase agreement, whereas the final payment is then made on transfer of the title
of the rig to the Company.
While we have signed various sales and purchase agreements to support our planned rig expansion,
rig titles were not transferred to ADNOC Drilling as the terms and the conditions of the transfer were
not yet completed as of March 31, 2023.
As CapEx will ramp-up in the next three quarters, the full year guidance of $1,300 – 1,750 million is
confirmed.
Quarterly and Annual Capital Expenditure
USD, Million
942
583
434
207 223
135 147 172 129 78 76
1Q 2021 2Q 2021 3Q 2021 4Q 2021 FY 2021 1Q 2022 2Q 2022 3Q 2022 4Q 2022 FY 2022 1Q 2023
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Operational Highlights
Drilling Services
USD Million 1Q23 1Q22 YoY % 4Q22 QoQ %
Fleet 115 104 11% 115 0%
Onshore 74 70 6% 74 0%
Offshore Jack-up 31 24 29% 31 0%
Offshore Island 10 10 0% 10 0%
Rented rigs 5 8 -38% 6 -17%
Rigs Availability* 95% 96% -1% 94% 1%
Onshore 93% 95% -2% 91% 2%
Offshore Jack-up 97% 98% -1% 98% -1%
Offshore Island 100% 98% 2% 100% 0%
Number of Wells Drilled* 142 147 -3% 177 -20%
Onshore 121 128 -5% 151 -20%
Offshore Jack-up 14 14 0% 18 -22%
Offshore Island 7 5 40% 8 -13%
* See Appendix 1 (Glossary) for the calculation of certain metrics referred to above.
Through the end of the first quarter, the Company had a fleet of 115 owned rigs with availability of
95% compared to a fleet of 104 owned rigs with 96% availability in the corresponding period of 2022.
Operational highlights of note during the period are as follows:
• A land rig completed 23 years LTI free operations.
• Achieved TRIR frequency of 0.43 against a target of 0.70.
• Witnessed an improvement in rig move performance which averaged 3.25 days per move.
• Drilled the longest well for ADNOC Onshore at 37,605 ft including a 21,122 ft 8 ½” open hole
section.
• Drilled the longest 12 ¼” section (8,543 ft measured depth) and longest 8 ½” sections (21,122 ft
measured depth) for ADNOC Onshore.
• Five new jack-up rigs joined the operational fleet in the second half of 2022, contributing to year-
on-year offshore revenue growth. The Company expects to integrate nine jack-ups into
operations over the next two years.
• Drilled 8 ½" section to measured depth at 26,500 ft, the longest well drilled by any jack-up rig in
ADNOC Offshore.
• Drilled the longest 6” hole in Lower Zakum field (9,553 ft) for ADNOC Offshore.
• Drilled the longest well in SARB field with the well total depth at 27,867 ft.
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Oilfield Services (OFS)
• OFS performed IDS on 40 rigs in the first quarter, which led to market share of 39%.
• 39 wells delivered in the first quarter of 2023 with 18 benchmarked wells delivered of which 13
benchmarked wells were ahead of schedule and budget.
• 16.1% year-on-year improvement in drilling efficiency.
• 521 IDS wells were delivered since 2019 with 269 benchmarked wells delivered of which 203
wells were completed ahead of schedule and below budget.
• During the first quarter, 3 frac stages were performed.
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Outlook
To enable ADNOC’s strategic imperative of expanding production capacity from four to five million
barrels per day by 2027, ADNOC Drilling accelerated its own growth plans.
The Company continues to expect its owned rig count to total 142 by the end of 2024, which
compares to IPO guidance of 127 rigs by the end of 2030.
The additional rigs require CapEx of $2.0 - $2.5 billion over the two-year period ending 2024, a net
increase of some $1 billion over and above the original IPO guidance.
ADNOC Drilling reiterates its fiscal year 2023 financial guidance as presented below:
USD Million FY 2023 Guidance
Revenue 3,000 - 3,200
Onshore Revenue 1,500 - 1,600
Offshore Jack-up Revenue 800 - 900
Offshore Island Revenue 200 - 250
Oilfield Services Revenue 500 - 550
EBITDA 1,350 - 1,500
EBITDA Margin 45% - 47%
Net Income 850 - 1,000
Net Income Margin 28% - 31%
CapEx 1,300 - 1,750
Leverage Target < 2.0x
ADNOC Drilling’s medium-term guidance remains as follows:
• Revenue CAGR in the 12% - 16% range.
• EBITDA Margins around 50% with drilling margins exceeding 50% and OFS Margin in a
range of 22% - 26% medium term versus 2021.
• Conservative long-term leverage target of up to 2.0x net debt / EBITDA, excluding material
M&A.
• Net working capital as percentage of revenue target of 10% - 11%.
• Maintenance CapEx post-2024 of $200 - $250 million per annum.
The Company’s longer-term growth remains supported by the maintenance of production capacity,
the UAE’s goal to achieve gas self-sufficiency and the development of its vast unconventional
resources, continued expansion of the OFS segment’s Integrated Drilling Solutions and the pursuit
of both regional expansion opportunities and new revenue streams such as complimentary services,
manufacturing opportunities and technology, including entry to renewables technology and
solutions. ADNOC Drilling continues to strive to make strong progress on delivering growth and
maximizing returns for our shareholders. The immediate focus remains on meeting robust financial
targets, whilst maintaining operational excellence.
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Dividend Policy
The Company’s ability to pay dividends is dependent on several factors, including the availability of
distributable reserves, capital expenditure plans and other cash requirements in future periods. Any
level or payment of dividends will depend on, among other things, future profits and the business
plan of the Company, at the discretion of our Board of Directors and ultimately shareholder
approvals.
As per the Company’s announced policy, dividends are to be paid semi-annually with a final annual
dividend distributed to shareholders in the first half and the payment of the interim dividend in the
second half of each fiscal year. The dividend policy is progressive, reflecting robust underlying cash
flow, and the annual distribution is expected to grow by at least 5% per annum on a dividend per
share basis over the next four years (2023-2026).
This policy is designed to reflect our strong and visible long-term cash flow and our expected long-
term earnings potential, while allowing us to retain sufficient cash to fund ongoing operating
requirements and continued investment for long-term growth. The policy is subject to consideration
by our Board of Directors and will cover the cash management requirements of our business for
operating expenses, interest expense, anticipated capital expenditures and market conditions. In
line with the progressive policy, the Board considers dividend a capital allocation priority alongside
investment in profitable growth and is committed to returning a competitive and growing cash
dividend to our shareholders.
Subject to the foregoing, shareholders at the Annual General Meeting in April of 2023 approved a
final dividend payment for the second half of 2022 totaling $341.25 million, or 7.83 fils per share,
which was distributed to shareholders on April 25, 2023. This follows the interim cash dividend for
the first half of fiscal year 2022 which totaled $341.25 million, or 7.83 fils per share, and was
distributed to shareholders in September 2022. This brings the total full-year 2022 dividend to $682.5
million, or 15.67 fils per share, a 5% year-on-year increase from 2021 and in-line with the Company’s
dividend policy.
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Earnings Webcast and Conference Call
ADNOC Drilling will host the earnings webcast and conference call followed by a Q&A session for
investors and analysts on Thursday, May 11, 2023, at 12:00 pm UAE time / 09:00 am UK time.
The call will be hosted by Abdulrahman Alseiari (CEO), Esa Ikaheimonen (CFO) and Emri Zeineldin
(Senior Vice President OFS). Interested parties are invited to join the call by clicking here.
A replay and transcript will be made available following the event, accessible from the Investor
Relations section of ADNOC Drilling’s website.
Share Price and Ownership
Our shares are traded on the Abu Dhabi Securities Exchange (ADX) under the symbol
ADNOCDRILL. The closing share price as of March 31, 2023, was AED 3.95. In the period from
January 1, 2023, through March 31, 2023, the share price traded in a range between AED 2.96 and
AED 3.99. Market capitalization was AED 63.2 billion as of March 31, 2023, and an average of 6.6
million shares traded daily during the first quarter of 2023.
As of March 31, 2023, the Abu Dhabi National Oil Company (“ADNOC”) owned a majority 84% stake
in the Company and Baker Hughes Holding SPV Ltd. (“Baker Hughes”) owned 5% stake in the
Company, while 11% of our outstanding shares were publicly owned by other institutional and retail
investors.
ADNOC Drilling is included in three of FTSE Russell’s globally recognized indices including the
FTSE Emerging Index, FTSE Global Large Cap Index and FTSE All-World Index. Furthermore, in
the first quarter of 2022, ADNOC Drilling was also included as an inaugural member of the FADX 15
Index. The index is uniquely designed by ADX and FTSE Russell to track the performance of the
most liquid and largest companies on the ADX main market.
Second Quarter 2023 Results
We expect to announce our second quarter 2023 results on or around August 8, 2023.
Contacts
Massimiliano Cominelli Adham Kamel
Vice President, Investor Relations Senior Analyst, Investor Relations
mcominelli@adnoc.ae akamel@adnoc.ae
May 11, 2023
ADNOC Drilling Company P.J.S.C.
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Appendix: Glossary
Financial Terms
EBITDA represents Earnings Before Interest, Tax, Depreciation and Amortization
Net debt is calculated as total interest-bearing debt less cash and bank balances (including term
deposits with banks) adjusted for lease liabilities.
Net debt to EBITDA ratio is calculated as interest-bearing net debt as of the end of the period
presented, divided by EBITDA for the twelve months ended on the last day of the period
presented.
Capital employed is calculated as the sum of total assets minus non-interest-bearing current
liabilities.
Return on capital employed is calculated as operating profit for the twelve months ended on
the last day of the period presented divided by capital employed on the last day of the period
presented. Operating Profit is defined as profit excluding financing, tax and income and
expenses from investments.
Leverage ratio is calculated as (a) interest-bearing net debt, divided by (b) the sum of interest-
bearing net debt plus total equity.
Return on equity is calculated as profit for the period for the twelve months ended on the last
day of the period presented divided by total equity on the last day of the period presented.
Operating Working capital is calculated as current assets excluding cash and bank balances
minus current liabilities excluding lease liabilities.
Operating Cashflows are Net cash generated from operating activities as stated in the cash
flow statement.
Free cash flow is calculated as net cash generated from operating activities less payments for
purchase of property & equipment and advances to contractors and finance income received.
Opex represents Operating expenditure that includes direct cost and general and administrative
expenses excluding depreciation, amortization and impairment as stated in the statement of
profit or loss and other comprehensive income.
Capital expenditure is total cash capital expenditure for payments made for purchase of
property and equipment including prepaid delivery payments as stated in the cash flow
statement.
All financial terms have meaning as defined in the International Financial Reporting Standards
(“IFRS”) unless otherwise stated.
IFRS are accounting standards issued by the IFRS Foundation and the International Accounting
Standards Board (IASB). They constitute a standardized way of describing the company's
financial performance and position so that company financial statements are understandable
and comparable across international boundaries.
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Industry Terms
Rig means a drilling unit and equipment package and is an integrated system that drills Oil and
gas wells, in the earths subsurface.
Standby is period when the works are unable to proceed and when the rig is put on standby for
various reasons, waiting-on-weather or inspection, or any other reason based on the mutual
understanding between the Company and the customer and as defined in the contract.
Planned Maintenance is a scheduled Turnaround maintenance. and it varies based on built
year, class and design. Usually drilling rigs undergo major maintenance every five years subject
to HSE and Asset Integrity Protocols. However, jack-up rigs may require outages during the
intermediate two and half years for class renewal surveys.
Owned Rig includes rigs acquired through rig-built project or purchased from market, the title of
which is transferred to ADNOC Drilling.
Rented Rigs are rigs rented from 3rd party rig providers on the basis of back-to-back contracts
with customers with minimal mark-up to cover for administrative overheads.
Rig availability is Cumulative of (Rig days less actual maintenance days less rig related non-
productive time less actual rig move days) divided by Cumulative of (Rig days less planned
maintenance days less planned rig move days).
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Cautionary Statement Regarding Forward-Looking Statements
This communication includes forward-looking statements which relate to, among other things, our
plans, objectives, goals, strategies, future operational performance, and anticipated developments
in markets in which we operate and in which we may operate in the future. These forward-looking
statements involve known and unknown risks and uncertainties, many of which are beyond our
control and all of which are based on management’s current beliefs and expectations about future
events. Forward-looking statements are sometimes identified by the use of forward-looking
terminology such as “believes”, “expects”, “may”, “will”, “could”, “should”, “would”, “intends”,
“estimates”, “plans”, “targets”, or “anticipates” or the negative thereof, or other comparable
terminology. These forward-looking statements and other statements contained in this
communication regarding matters that are not historical facts involve predictions and are based on
the beliefs of our management, as well as the assumptions made by, and information currently
available to, our management. Although we believe that the expectations reflected in such forward-
looking statements are reasonable at this time, we cannot assure you that such expectations will
prove to be correct. Given these uncertainties, you are cautioned not to place undue reliance on
such forward-looking statements. Important factors that could cause actual results to differ materially
from our expectations include, but are not limited to: our reliance on ADNOC Onshore and ADNOC
Offshore for deploying rigs as per existing terms and conditions; failure to successfully implement
our operating initiatives and growth plans, including our cost savings initiatives, due to general
economic conditions, our reliance on information technology to manage our business; laws and
regulations pertaining to environmental protection, operational safety, the extent of our related party
transactions with ADNOC Group; the introduction of VAT and other new taxes in the UAE; failure to
successfully implement new policies, practices, systems and controls that we implemented in
connection with or following our IPO; any inadequacy of our insurance to cover losses that we may
suffer; general economic, financial and political conditions in Abu Dhabi and elsewhere in the UAE;
instability and unrest in regions in which we operate; the introduction of new laws and regulations in
Abu Dhabi and the UAE; and other risks and uncertainties detailed in our International Offering
Memorandum dated September 6, 2021 relating to our initial public offering and the listing of our
shares on the Abu Dhabi Securities Exchange, and from time to time in our other investor
communications. Except as expressly required by law, we disclaim any intent or obligation to update
or revise these forward-looking statements.
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Sentiment: neutral