ADNOC Drilling CFO on Q2 Results, Regional Expansion and AI Across the Fleet

Adnoc Drilling delivered yet another strong set of results for Q2, with rising revenue and profit reinforcing its position as the region's leading drilling operator.

But what is driving that growth, and can the momentum continue through the second half of 2026?

Yusuf Salem is the chief financial officer at Adnoc Drilling.

He joins us now to discuss these results in further detail, how the company is balancing dividend commitments with fleet expansion and acquisitions, and whether regional.

Consolidation is becoming a core pillar of strategic growth.

Yusuf, welcome to Capital Markets.

Thank you so much for having me.

Now Adnoc Drilling posted a net profit of $706 million and revenue up 4% to $2.5 billion driven by strong oil field services growth, disciplined execution, and a highly contracted revenue base.

Let's go further into what's driving this growth and can this pace continue into the second half of 2026?

It will definitely continue.

So we've already gone ahead and reiterated our guidance for the full year, which implies further growth in the second half.

For example, we're guiding to a minimum net income of $1.45 billion for the whole year, meaning at least around $750 million for the second half of the year, up from around $700 in the first half.

And this is because we have even more rigs joining the fleet in the second half, so a couple of more rigs on the offshore side.

We also Have more regional growth in the second half where one rig is being deployed in Oman, as well as a ramp up in our oil field services where we have 8 more rigs being converted to provide both rigs and and services and not only into the second half of 26 but also into 27 where we expect that growth to continue and into the medium term as well.

Excellent, and I'd like to touch up on a few of those points, particularly Oman and some of the regional expansion and consolidation.

That you're doing, but as global energy transition timelines evolve, how confident are you that the drilling demand and Adnox's drilling role, as the region's largest fleet operator holds up over this next decade?

We're extremely confident, so Adno drilling is not only drilling for oil.

We are, we have a full solutions that we can offer for any type of commodity or resource.

So we have a massive growing gas business as well.

Adnoc has recently announced massive expansions on the gas side with the Ha Russia offshore sour gas project.

Gas captain shave, the unconventional gas coming up, and Admo drilling is at the center of all of this drilling services and all the full, the full scope.

We've also done even beyond that historically we've drilled geothermal wells.

We've done carbon capture and sequestration wells, so we have a full end to end.

Billing services, engineering, and manufacturing capabilities which allow us to serve ADM, Kuwait Oil Company, PDO in Oman, and all our global clients across the entire energy value chain.

Excellent.

And I'd like to touch a little bit on this very aggressive dividend floor that you've also put in place.

Agnot Drilling has set a dividend floor of $1.05 billion for 2026, and with your Q2 results, your strong free cash flow supported a $262.5 million quarterly dividend, bringing those dividends declared thus far to $525 million.

So you are halfway to that target.

But the question, how do you balance that dividend commitment against the capital required to fund this fleet growth and the international acquisitions that you have in the pipeline as well?

We actually see it as a very conservative floor, so this $1.05 billion represents only 2/3 of our net income, which is at least $1.45 billion allowing us at least $400 million of incremental earnings to be reinvested into the business and its growth.

Similarly, on the cash flow side, we're expecting free cash flow of at least 1.2 to $1.3 billion again, leaving us at least $150 to $250 million above the minimum dividend for further reinvestment.

Into the business and this free cash flow is already after a CAE program of at least $600 million into the country this year.

So we have a significant incremental earnings and free cash flow.

On top of that, we also have very low leverage, only one time net debt we did that, leaving us also a lot of balance sheet flexibility for both additional dividends and growth.

And that's why we both have a discretionary dividend policy that allows us to distribute even more above the flow and at the At the same time we have a very significant growth program both organically and inorganically to keep delivering growth for the company and shareholders.

Excellent.

And going a bit further into that growth, and you referenced Oman earlier in this discussion, but you have moved beyond the UAE now with the SLB joint venture, bringing 8 land rigs into Kuwait and Oman and reports of further acquisition in the pipeline there.

Is this regional consolidation now a core pillar of your growth strategy?

Definitely we see a very clear opportunity in these markets.

We had extremely committed clients like Kuwait Oil Company in uh in, in Kuwait like IDO in Oman which are going through significant capacity increases.

For example, in Kuwait from 3 to 4 million barrels per day.

They're adopting the latest technologies out in, in the market and new solutions, and hence we have a clear opportunity to serve them.

At the same time you have.

Very high quality companies, teams and platforms like SLDC and MDPS that we have partnered with who have great assets, people, and contracts and looking to partner with someone who can put even more resources, scale, capital, and technology behind them to take these platforms to the next, next level.

So we see this roll up opportunity as a recurring and significant opportunity to continue to pursue.

So obviously you mentioned technology there and I would like to close out on speaking a bit about AI.

You've spoken about AI as central to future competitiveness and workforce readiness.

What's the actual tangible return that you're seeing from AI deployment across the drilling fleet?

Is it more on the cost, the speed, the safety, where it moves the needle the most?

Maybe give us a bit more details on the artificial intelligence program and use that you're doing there.

Perfect.

Number one, the most important for us is safety.

We have 11,000 people on the rigs and their safety is our utmost priority.

We have the best safety track record in the industry region and globally, and part of that now is having cameras on all the rigs installed with AI computer vision to be able to pre-alert before any potential accident can, can, can, can happen due to any behavior or noncompliance or other issues on the, on the rigs.

Second is Efficiency today, one of the things we're doing with AI is significantly cutting down our non-productive time well below 1%.

Again, one of the best in the industry globally by having predictive maintenance, by having predictive analytics around any potential shutdowns or issues, and hence keeping our equipment on and hence becoming more efficient.

And then third is cost, allowing us basically to have our people operating through remote operating.

Center remote control centers and relying more on autonomous operations on the rig that allows us to optimize the cost while giving our people a better work experience and focusing more and more value added and analytical activities as opposed to manual activities which can be done by autonomous equipment in the ring and all of these have helped really improve our returns which are now highest in the sector at around 34% return on equity because of technology really coming. and driving it, we have now a portfolio of more than 140 patents through our technology platform Inner Soul.

We have the first AI enabled and autonomously walking rig that we've deployed this year.

I will continue to push the envelope on the technology side.

Incredible.

Well, thank you so much, Yusuf, for coming on the show today.

Congratulations on your results, and we appreciate you coming on to give more details about this to our listeners and our viewers.

So thank you very much.

Thank you so much for having me.