ADNOC Drilling Company and Alpha Dhabi Holding PJSC have formed a strategic investment joint venture (JV) in the Abu Dhabi Global Market. The JV aims to focus on global investments in energy technology and strengthen tech-enabled energy services.
In its initial investment, Alpha Dhabi contributed a 25% equity stake in Gordon Technologies, a prominent measurement provider, while drilling (MWD) technology to the US oil and gas industry. This stake is valued at approximately $180 million.
“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,” said Eng. Hamad Al Ameri, Managing Director and Group CEO of Alpha Dhabi. “Through this joint venture, and leveraging both Alpha Dhabi and ADNOC Drilling’s complementary capabilities, we look forward to driving further value creation for the benefit of our mutual stakeholders.”
Establishing the JV and including Gordon’s 25% share capital is anticipated to yield value-enhancing returns for both shareholders. This move aligns with ADNOC Drilling’s business strategy and is projected to support the company’s long-term dividend growth.
Gordon, established in 2014, holds a leading position in MWD technology provision within the US. Expected to generate revenue exceeding $230 million in the fiscal year 2023, the company facilitates efficient drilling operations by delivering high-performance metrics and cost efficiencies. Gordon’s fully integrated services, particularly in high-temperature applications, exhibit reliability measures that surpass industry standards.
“Through the incorporation of our JV, we are set to accelerate investment in tech-enabled energy solutions,” said Abdulrahman Abdullah Al Seiari, CEO of ADNOC Drilling. “Access to these technologies will support us in our operations and accelerate well delivery optimisation in the development of unconventional resources as we strive to enable gas self-sufficiency for the nation.”
The acquisition of Gordon is financially favourable for the JV’s shareholders, offering profitability, valuation multiples, cash flow generation, and potential dividends. Moreover, Gordon anticipates a free cash flow yield of over 10% in FY2023.
ADNOC Drilling maintains a 51% majority stake in the JV, as disclosed on November 10, 2023, while Alpha Dhabi holds the remaining 49%, ensuring equal representation on the Board for both entities. ADNOC Drilling will include the JV’s financial results through the equity method, starting from the company’s Q1 2024 financial results.
The JV aims to acquire and invest in tech-enabled oilfield services firms, subject to regulatory approvals, fostering an adaptable ecosystem that enhances market value and operational efficiencies. It is poised to drive investment decisions and support the UAE’s broader energy transition goals, net-zero objectives, and ongoing economic diversification endeavours.
