ADNOC raising over $1.1 billion from drilling unit IPO; to list on local exchange Oct 3

Abu Dhabi National Oil Co. has completed the book-building process for the initial public offering of its drilling unit, raising more than $1.1 billion in the company's second flotation of a subsidiary.

ADNOC is selling 11% of ADNOC Drilling, which is expected to be listed on the Abu Dhabi Securities Exchange on Oct. 3, it said in a Sept. 27 statement. ADNOC initially had intended to sell a 7.5% stake in its drilling unit.

Following the listing, ADNOC will own 84% of ADNOC Drilling and Baker Hughes will retain the 5% stake it bought in the unit in 2018. Helmerich & Payne will own 1% through its IPO investment that was announced on Sept. 8.

ADNOC Drilling, which currently has 96 rigs, will acquire eight more for $86.5 million from Helmerich & Payne, ADNOC said in a Sept. 8 statement. After the transaction, Helmerich & Payne will invest $100 million in ADNOC Drilling's IPO.

This will be ADNOC's second flotation 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 monetization

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 select ADNOC gas pipeline assets valued at $20.7 billion. ADNOC will get upfront proceeds of more than $10 billion from the transaction.

In 2019, ADNOC 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 select 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.