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ADNOC Drilling Co., a subsidiary of Abu Dhabi's state oil company ADNOC, reported a Q3 2023 net profit of $257 million, 36% higher year-on-year (YoY) on the back of an expanded fleet and growth in all segments.
The net profit topped analysts’ mean estimate of $231.7 million, according to LSEG data.
Third quarter revenue increased to $776 million, up 16% YoY with growth across all segments, the driller said in a regulatory filing on Tuesday.
CEO Abdulrahman Abdulla Al Seiari said: “Our positive third quarter results clearly demonstrate the effective execution of our comprehensive strategy to grow earnings by expanding our fleet and our service offering."
ADNOC Drilling listed on the Abu Dhabi bourse in 2021 after ADNOC, its majority shareholder, raised $1.1 billion from investors through an IPO.
The company also updated its guidance for full year 2023 driven by increased earnings visibility. It now expects total revenue between $3.0 to $3.2 billion and net profit of $0.9 - $1.0 billion (previously $0.85 - $1.0 billion), with a margin range of 29% - 32% (previously 28% - 31%).
It also expects capital expenditure to be around $1.3 billion for 2023.
Analyst's comment
Following the earnings announcement, Citi Research said that ADNOC Drilling's equity story remains attractive. "The business continues to make progress towards 142 rigs by end 2024 alongside visible improvement in unconventional operations," analyst Oliver G. Connor said in a note.
"With the execution of 142 rigs on track, we see medium term accretion in margins and acceleration in unconventionals as a key differentiator for ADNOC Drilling. Moreover, the resilient financial framework allows shareholders to be the primary beneficiaries of this growth," he said.
(Reporting by Brinda Darasha; editing by Seban Scaria)
