ADNOC Drilling delivered another strong set of results for Q3. Joining me today is Youssef Salem, Chief Financial Officer of ADNOC Drilling. Youssef, welcome to Capital Markets Wall Street to Mena.
Thank you so much for having me.
ADNOC Drilling reported revenue of $3.7 billion, EBITDA of $1.66 billion, and net profit of $1.07 billion for the first nine months of 2026. What are the key drivers?
It is our best ever nine months in the history of the company — driven by the largest fleet we have ever had, 172 rigs, more than 140 in Abu Dhabi and 30 in the rest of the GCC including the latest batch of AI-enabled rigs, which are creating significant efficiencies and savings with their technology. Also continued growth in our technology-enabled oilfield services segment, gaining more market share. And the acceleration of our M&A programme — we have now fully consolidated two acquisitions, SBDC and MTS. A combination of organic and inorganic growth.
You previously indicated low to mid single digit growth for 2027 based on contracts secured. What does momentum look like heading into ADNOC next week?
Very strong. We have four additional contracted rigs from ADNOC Offshore arriving later this year and next year. Four onshore rigs being built in China for clients in Kuwait and Oman, due next year. And two rigs where we are the lowest bid for Kuwait Oil Company on the offshore side. By end of next year we expect the fleet to ramp up from 172 to 186 rigs. We have also unveiled our new drill-to-operate strategy — an additional market of $4 to $5 billion of additional services. And ADNOC as a group has been announcing major new projects. We expect more significant announcements next week, which will trickle down to ADNOC Drilling as the main beneficiary.
How quickly will drill to operate translate into revenue?
In 2027 we start to have some early contributions. From 2028 onwards it steps up significantly. We expect within five years to have more than $1 billion of revenue from these new tech-enabled services. A quick reminder — our oilfield services segment, which started around six years ago, is now $1.5 billion of revenue and 30% of our business. We have the track record to build partnerships, capabilities, and scale them up.
Your dividend flow is $0.23 per share — $1.05 billion — and the board approved a $350 million Q3 distribution. How much room is there to reward shareholders further?
Significant room. Our total dividends for the year will reach $1.225 billion — $175 million above the minimum guaranteed base. At the same time we have $600 million of CapEx investment this year, growing to at least $800 million next year. We are ramping up both distributions and CapEx simultaneously — because we generate $1.2 to $1.3 billion in free cash flow per year, and our balance sheet has only one times net debt. That gives us the unique ability to be both a growth and distribution play for our shareholders.
You have 30 rigs in Kuwait and Oman. What have those investments delivered?
We are very bullish on these expansions. 30 rigs expected to ramp up to more than 35 by end of next year. And this is only around 10% of the overall market size in these countries — substantial runway remaining. Our acquisitions were done at very accretive multiples — around 3.5 to 4 times EV to EBITDA, roughly one third of the multiple we operate at in the market. Effectively three times the accretion on the cash flows coming in. And we are already seeing synergies — one rig redeployed from the UAE into Oman through these platforms.
Your first AI-enabled rig began operating in June. What can you quantify about the difference it makes?
An incremental CapEx investment of $5 million per rig for drilling and move automation. That translates directly into a higher day rate for us. Through our IRR mechanisms we generate a 15% IRR on that incremental spend. For the client — ADNOC Offshore — they realise savings of $60 million over ten years. Almost 12 times their return on investment — from cutting drilling time and cutting move time between wells through autonomous moves. We are looking at single-digit efficiency gains across both, plus efficiency in crew numbers. That is why clients are keen not only on new rigs but on retrofitting automation onto existing rigs.
You built up inventory to protect against regional disruption. Has that started to unwind?
Not yet. Inventory levels remain elevated at roughly $70 million compared to around $27 million pre-event. We remain very vigilant on resilience. But even with that we are maintaining total working capital of 10% of revenue — well below our 12% guidance. We are also bringing in new rigs ahead of schedule to ensure that even if there are transportation risks, we are still on track. The first two island rigs started operation this year ahead of schedule.
Youssef, congratulations on yet another record set of results. Thank you so much.
Always a pleasure. Thank you so much for having me.
