Adnoc Drilling JV M&A war chest to rise to $2bn

• $800m spent already this year
• Latest deal worth $223m
• Fourth purchase since January

Enersol Energy Solutions, the joint venture between Abu Dhabi’s Adnoc Drilling and the investment company Alpha Dhabi, is looking to expand its war chest by $500 million to $2 billion.

The company has already spent $800 million on acquisitions this year. In its latest deal, the fourth since January, Enersol has acquired a 95 percent stake in the US-based Deep Well Services (DWS) for $223 million.

Now it wants to expand its original $1.5 billion acquisition pool in order to grow Adnoc Drilling’s portfolio domestically and internationally.

“We have another $700 million left to deploy next year out of the $1.5 billion,” Youssef Salem, chief financial officer at Adnoc Drilling, told AGBI this week at the Adipec energy conference in Abu Dhabi.

“We also have the potential to add debt on the joint venture as well, up to another $500 million.”

DWS, established in 2008 in Pennsylvania, is an oilfield services company specialising in well work hydraulic completion units and workover rigs. 

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Enersol’s three previous deals were for EV Holdings, a British company specialising in well diagnosis and analysis, acquired for $45 million in August; NTS Amega, a Dubai-based company involved in the repair and rental of manufacturing tools for the energy sector, with a 51 percent stake bought for $58 million in July; and Gordon Technologies, a US provider of measurement-while-drilling services, with a 51 percent stake bought in January for $180 million. 

Earlier this year, Enersol increased its stake in Gordon Technologies to 67 percent.

The companies it acquired have themselves subsequently bought other concerns involved in and around well drilling: Vertex Downhole, of Alberta, Canada, and Paisano Labs and Cobore Inc, both based in Houston, Texas.

“What ultimately we are trying to do is create a business that spans the entire value chain of the well,” Salem said.

Adnoc Drilling, listed on the Abu Dhabi Securities Exchange since October 2021, is the largest drilling services company in the Middle East by fleet size. This year, it announced a $1.7 billion contract to deliver 144 unconventional wells to its parent company Adnoc Group.

Adnoc Drilling operated solely in Abu Dhabi until last year. Through Enersol, it aims to expand its reach and use the acquisitions to boost its technology know-how.

“It’s a way for us to expand our footprint outside [the UAE] with people who already have tried and tested and patented technologies in these countries – a way to future-proof the business by making sure that we own the critical IP that’s required to operate the business, a way to expand our profit margins,” Salem said.

Adnoc Drilling launched services in Jordan last year and Salem said it was “also expecting, by early next year, to be in Oman and Kuwait”.

The Enersol deals allow Adnoc Drilling to grow into other regions in the Gulf via the new subsidiaries. Salem said that DWS “is in the process of setting up a joint venture in Saudi Arabia with a local partner. So, effectively, we are reaching to Saudi without Adnoc Drilling getting directly there.”

Adnoc Drilling’s net profit rose 30 percent year on year to $335 million in the third quarter of 2024, beating market expectations. Quarterly revenue jumped 32 percent from the same period in 2023 to more than $1 billion. The share price is up by 34 percent to AED5.12 since the start of the year.