BHGE to Acquire $550MM Stake in ADNOC Drilling
Baker Hughes, A GE company (BHGE) and Abu Dhabi National Oil Company (ADNOC) have signed a strategic partnership agreement, which will see BHGE acquire a five percent stake in ADNOC’s subsidiary, ADNOC Drilling, for $550 million.
The transaction, which values ADNOC Drilling at approximately $11 billion, was approved by the board of directors of each company and is expected to close in the fourth quarter, subject to customary closing conditions including appropriate regulatory approvals.
The partnership represents the first time ADNOC has brought an international strategic partner to acquire a direct equity stake in one of its existing services businesses. It will expand ADNOC Drilling’s capabilities into the integrated drilling and well construction segment and expand BHGE’s presence in the UAE, according to a statement published on BHGE’s website.
“This partnership brings together BHGE and ADNOC, backed by a close and long working relationship. We are very pleased to take a minority stake in ADNOC Drilling to jointly develop and further grow the company’s technical capabilities, market access and value,” BHGE Chairman and CEO, Lorenzo Simonelli, said in a company statement.
“In a unique way, it allows us to drive predictable revenue streams and long-term growth for both companies and lets us invest in a stable, reliable and secure market environment,” he added.
Sultan Ahmed Al Jaber, UAE minister of state and ADNOC Group CEO, said the partnership with BHGE comes at an important time.
“We chose BHGE after a rigorous and competitive process as a partner with whom we have a long-standing working relationship and who shares ADNOC’s long term vision and values,” he was quoted as saying on BHGE’s website.
“This unique partnership with BHGE comes at an important time in the drilling needs of Abu Dhabi as ADNOC grows its conventional and unconventional hydrocarbon resources and as we see future potential for further regional growth. It will ensure we will be able to better service our upstream growth while capturing and retaining greater value,” he added.
ADNOC Drilling is the largest drilling company in the Middle East, according to the company’s website, which states that the business operates “an expansive fleet of rigs that includes 63 land rigs, 21 jackup rigs, and 11 island rigs”.
BHGE describes itself as the world’s first and only fullstream provider of integrated oilfield products, services and digital solutions. The company employs more than 1,000 workers in the UAE.
In June this year, GE announced that it plans to pursue an “orderly separation” from BHGE over the next “two to three years”.
The company said it intends to “fully separate” its 62.5 percent interest in BHGE “in an orderly manner” over the timeframe, in a move which it says “will provide BHGE with enhanced agility and the ability to focus on leading in the oil and gas industry”.
BHGE reported revenue of $5.5 billion and orders of $6 billion for the second quarter.
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