ADNOC Drilling Confirms Enhanced Dividend Policy With Minimum 10% Growth Annually For Five Years

ADNOC Drilling Company has secured shareholder approval for a new progressive dividend policy at its General Shareholder Meeting. This policy aims to increase dividends by at least 10% annually on a per-share basis over the next five years (2024-2028). The cumulative minimum yield expected from this policy during this period is over 27%.

The Board of Directors retains the discretion to approve additional dividends beyond the progressive policy, considering free cash flow accretive growth opportunities. Dividends are planned to be paid semi-annually, with a final dividend distributed in the first half and an interim dividend in the second half of each fiscal year.

ADNOC Drilling's strategy includes expanding its fleet and developing integrated drilling services to support ADNOC's production capacity growth. This involves leveraging opportunities presented by the UAE's world-class unconventional energy resources. A new company, Turnwell, has been established to focus on these opportunities, starting with an initial contract for 144 wells and potential for thousands more.

Commenting on the new dividend policy, Abdulmunim Saif Al Kindy, ADNOC Upstream Executive Director and Vice Chairman of ADNOC Drilling, stated, "The approval of this enhanced dividend policy reflects ADNOC Drilling's commitment to delivering increasing value to shareholders, enabled by an accelerated and multi-faceted growth strategy that embraces artificial intelligence, digitisation, and advanced technologies both in the UAE and internationally."

Through its strategic joint venture with Alpha Dhabi, Enersol, ADNOC Drilling aims to acquire and invest in global energy technologies. This initiative fosters a scalable technology ecosystem to enhance market value and improve operational efficiencies. Enersol recently acquired a 67.2% controlling stake in Gordon Technologies. The transaction is subject to customary regulatory approval and is nearing completion of two additional transactions.

On 23rd May 2024, ADNOC completed a $935 million institutional placement of ADNOC Drilling shares. This placement represented 5.5% of ADNOC Drilling's total issued share capital, increasing the Company's free float to 16.5%. This transaction is the largest Accelerated Book Building (ABB) done in the MENA region so far, reflecting strong market demand.

Enhanced Shareholder Value

The increased free float resulted in a higher weight in FTSE indices and is expected to pave the way for inclusion in the Morgan Stanley Capital International (MSCI) Emerging Market Index. Inclusion in MSCI will diversify the Company's investor base and significantly broaden awareness of its unique value proposition.

ADNOC's recent placement of an additional 5.5% of ADNOC Drilling's share capital means there is now a greater number of shareholders to benefit from these enhanced returns. Al Kindy added, "ADNOC's recent placement means there is now a greater number of shareholders to benefit from these enhanced returns."

Additionally, ADNOC Drilling is actively pursuing regional growth by expanding its operations and potential regional acquisitions. These efforts align with supporting the UAE's wider energy security ambitions, net-zero agenda, and ongoing economic diversification efforts.

The company's strategic initiatives aim at enhancing shareholder value through technological advancements and regional expansion while maintaining financial prudence.

With inputs from WAM