Adnoc Drilling Company and Alpha Dhabi Holding announced today the incorporation of its strategic investment joint venture at Abu Dhabi Global Market. The JV will pursue global investments in energy technology and bolster tech-enabled energy services.
As the inaugural investment, Alpha Dhabi has contributed its 25 per cent equity stake in Gordon Technologies, a leading provider of measurement while drilling (MWD) technology to the oil and gas industry in the US. The equity stake has been valued at circa $180 million.
The establishment of this JV, and the contribution of Gordon’s 25 per cent share capital, is expected to bring value accretive returns to both shareholders and will be synergistic with Adnoc Drilling’s business. It will also support Adnoc Drilling’s long-term dividend growth profile.
Founded in 2014, Gordon is one of the leading MWD technology provider in the USA. With robust positions in its key operating basins and with expected revenue of more than $230 million in FY2023, Gordon supports efficient drilling operations for its customers through leading performance metrics and cost efficiencies. As one of the industry’s few fully integrated MWD players, the company occupies a unique position, particularly in high temperature applications, with reliability measures significantly outperforming the industry average.
Gordon has no leverage, and its acquisition is economically accretive to the JV’s shareholders from a profitability, valuation multiple, cash flow generation and dividend potential standpoint, along with a FY2023 expected free cash flow yield of more than 10 per cent.
Abdulrahman Abdullah Al Seiari, chief executive officer of Adnoc Drilling, said: “ Through the incorporation of our Joint Venture we are set to accelerate investment in tech-enabled energy solutions. Access to these technologies will support us in our operations, and to accelerate well delivery optimisation in the development of unconventional resources as we strive to enable gas self-sufficiency for the nation.”
Eng. Hamad Al Ameri, managing director and group CEO of Alpha Dhabi, added: “Since Alpha Dhabi’s minority stake acquisition of Gordon Technologies in 2022, we have supported its growth strategy in the US market and put the foundations in place for expansion to the Middle East region. Through this joint venture, and leveraging both Alpha Dhabi and Adnoc Drilling’s complimentary capabilities, we look forward to driving further value creation for the benefit of our mutual stakeholders.”
Adnoc Drilling holds a majority 51 per cent stake in the JV, with the remaining 49 per cent held by Alpha Dhabi, with equal board representation for both parties. The JV’s financial results will be accounted for by Adnoc Drilling through the equity method starting from the company’s Q1 2024 financial results.
The JV intends to acquire and invest in companies offering tech-enabled oilfield services solutions, subject to the relevant regulatory approvals, and foster a scalable ecosystem that will enhance market value and optimize operational efficiencies. It will be a major driver of investment decisions with the ability to support the UAE’s wider energy transition ambitions, net zero agenda and ongoing economic diversification efforts.