ADNOC Drilling and Alpha Dhabi Holding, listed on the Abu Dhabi Financial Market, announced the establishment of their joint project on the Abu Dhabi Global Market as part of their strategic partnership. The joint project's mission is to implement a group of global investments in energy technology and integrated energy services supported by technology.
As the first investment, Alpha Dhabi contributed a 25 percent stake in Gordon Technologies (Gordon), a leading provider of on-drilling measurement technologies in the oil and gas sector in the United States of America. The value of the equity stake was estimated at approximately $180 million.
It is expected that the establishment of this partnership and the acquisition of a 25 percent stake in Gordon Company will lead to increased returns for shareholders from both parties. The deal will also achieve additional value through the integration of the company’s business with that of ADNOC Drilling Company, and will support the growth of ADNOC Drilling Company’s dividends in the long term.
Gordon Company was established in 2014, and is one of the largest companies specialized in providing measurement technology during drilling in the United States of America. It has a strong position in the main operating basins and its revenues for the fiscal year 2023 are expected to exceed the threshold of $230 million.
Gordon supports its customers' efficient drilling operations through leading performance metrics and cost efficiencies. The company occupies a unique position as one of the few companies in this sector that provides integrated services for measurement during drilling, especially under high temperatures and applications with realistic measurements that significantly exceed the industry average.
Gordon has no indebtedness and its acquisition will create additional value for the joint venture shareholders in terms of profitability, multiple valuation, cash flow generation and earnings potential, along with an expected FY2023 free cash flow yield of more than 10 percent.
On this occasion, Abdul Rahman Al-Sayari, CEO of ADNOC Drilling, said: Through this joint project, we will accelerate investment in technology-based solutions. Acquiring these technologies will also support ADNOC Drilling's operations, and accelerate well delivery in the development of unconventional resources as we strive to achieve gas self-sufficiency for the UAE.
For his part, M. said: Hamad Al Ameri, Managing Director and CEO of Alpha Dhabi Holding: Since Alpha Dhabi acquired a minority stake in Gordon Technologies in 2022, we have supported the growth strategy in the US market and laid the foundations for its expansion in the Middle East. Through this joint project and benefiting from the integration and exchange of capabilities between Alpha Dhabi and ADNOC Drilling, we look forward to achieving additional value for common stakeholders.
ADNOC Drilling also disclosed on November 10, 2023, that it would own a majority stake of 51 percent in the joint venture, while Alpha Dhabi would own the remaining 49 percent, with equal representation of both parties on the Board of Directors. The financial results of the joint project will be calculated by ADNOC Drilling using the equity method, starting from the company’s financial results for the first quarter of 2024.
The joint venture intends to acquire and invest in companies that provide technology-enabled oilfield service solutions, based on relevant regulatory approvals, enhancing the company’s value in the market and raising its operational efficiency. It will be a major driver of investment decisions, in addition to its important role in supporting the transformational aspirations of the energy sector at the UAE level and advancing the agenda of achieving climate neutrality and ongoing efforts for economic diversification.
