MEOG: Drilling IPO and LTAs

This week’s MEOG looks at the successful IPO of the region’s largest drilling company and contracts for work offshore Saudi Arabia.

Abu Dhabi National Oil Co. (ADNOC) completed the initial public offering (IPO) of its drilling unit this week in a sale that was more than 30 times oversubscribed.

The share sale is the largest yet for Abu Dhabi, which has in recent years carried out an array of asset monetisation and IPO deals worth many billions of dollars, highlighting investor appetite for opportunities in the Middle East’s most stable countries.

The oversubscription appears to be par for the course on energy-related deals in the region, with deals throughout the Gulf Co-operation Council (GCC) continuing to attract widespread interest.

The parent sold 11% in ADNOC Drilling for $1.1bn with shares offered at AED2.30 ($0.62), receiving more than $34bn worth of orders. The deal valued the drilling unit at $10bn, below the $11bn valuation achieved in October 2018 when GE subsidiary Baker Hughes acquired a 5% stake in the company for $550mn.

Shares are expected to begin trading on the Abu Dhabi Securities Exchange (ADX) on October 3. At this point, ADNOC will retain a stake of 84%, Baker Hughes 5% and US rig owner and designer Helmerich & Payne (H&P) 1%, which it acquired after ADNOC Drilling recently bought eight land rigs from the US firm for $86.5mn.

Meanwhile, US-based engineering firm McDermott is understood to be leading the race among prequalified bidders for several offshore oilfield services contracts from Saudi Aramco.

Speaking to Upstream this week, sources close to proceedings said that McDermott is the likely winner among the pool of signatories to Aramco’s so-called long-term agreements (LTAs) for three contracts covering the Abu Sa’fah, Ribyan, Safaniyah and Zuluf oilfields. The deals, contract release purchase orders (CRPOs) 73, 74 and 84, are understood to be valued at a combined total of more than $500mn,

The sources said that the first of these related to engineering, procurement and construction (EPC) work for four rig jackets for the fields, with CRPO 74 relating to Abu Sa’fah and Safainyah and CRPO 84 Ribyan and Zuluf.