ADNOC to sell 7.5% of drilling unit, its second ever IPO, as it seeks to monetize assets

Abu Dhabi National Oil Co. plans to sell 7.5% of its ADNOC Drilling, which will be the UAE energy company's second initial public offering as it seeks to monetize assets and spend on growth projects.

ADNOC will sell shares in ADNOC Drilling on the Abu Dhabi Securities Exchange and will retain the right to increase the size of the IPO at any time before its pricing, it said in a Sept. 6 statement.

Baker Hughes bought 5% of ADNOC Drilling in 2018, a transaction that valued the company at around $11 billion at the time. Baker Hughes will not divest its stake as part of the IPO, ADNOC said. The listing is expected to occur in October, subject to approvals.

"As the sole provider of drilling rig hire services and rig-related services to ADNOC Group on agreed contractual terms, we will continue to play a critical role in enabling ADNOC to deliver on its 2030 crude oil production capacity target of 5 million barrels per day and achieving gas self-sufficiency for the UAE," said Abdulrahman al-Seiari, CEO of ADNOC Drilling, in the statement.

This will be ADNOC's second IPO of a unit after it sold 10% of fuel retailer ADNOC Distribution on the Abu Dhabi exchange in 2017, raising $851 million.

Last year, ADNOC raised $1 billion from institutional placement of another 10% of shares of ADNOC Distribution, with the parent company retaining an 80% shareholding in the unit.

Asset sales

Since 2019, ADNOC has been monetizing its oil and gas assets as it seeks to unlock cash to fund strategic projects, which include increasing oil output capacity to 5 million b/d by 2030, from around the current 4 million b/d.

In June 2020, ADNOC inked a deal worth more than $10 billion with a group of investors to sell a 49% stake in its gas pipelines a year after striking a similar transaction for its oil pipelines.

A consortium grouping Global Infrastructure Partners, or GIP, Brookfield Asset Management, Singapore's sovereign wealth fund GIC, Ontario Teachers' Pension Plan Board, South Korea's NH Investment & Securities and Italy's Snam will invest in some ADNOC gas pipeline assets valued at $20.7 billion. ADNOC will get upfront proceeds of more than $10 billion from the transaction.

ADNOC in 2019 clinched a $5 billion deal with a consortium that includes GIC, BlackRock Inc., KKR & Co. and Abu Dhabi Retirement Pensions and Benefits Fund to sell them pipeline infrastructure and collectively hold a 49% stake in ADNOC Oil Pipelines, a subsidiary of the parent company.

ADNOC Oil Pipelines will lease the national oil company's interest in 18 pipelines and give rights to transport crude and condensate from the company's onshore and offshore concessions over 23 years.