ADNOC Drilling announces new dividend policy with minimum 10% annual growth for 5 years

ADNOC Drilling announced shareholder approval of a new progressive dividend policy at its General Shareholder Meeting. This policy promises to increase dividends by at least 10% per annum on a dividend per share basis over the next five years, from 2024 to 2028.

The expected cumulative minimum yield from the new policy in this period is more than 27%.

Additionally, the board of directors may approve additional dividends over and above the progressive policy after considering free cash flow accretive growth opportunities. Dividends are expected to be paid semi-annually, with the final dividend distributed to shareholders in the first half of the fiscal year and the interim dividend in the second half.

Commenting on the new dividend policy, Abdulmunim Saif Al Kindy, ADNOC Upstream Executive Director and Vice Chairman of ADNOC Drilling, said, “The approval of this enhanced dividend policy reflects ADNOC Drilling's commitment to delivering increasing value to shareholders, enabled by an accelerated and multi-faceted growth strategy that embraces artificial intelligence, digitisation, and advanced technologies both in the UAE and internationally.”

On May 23, 2024, ADNOC completed a $935 million institutional placement of ADNOC Drilling shares. This placement represented 5.5% of ADNOC Drilling’s total issued and outstanding share capital and increased the company’s free float to 16.5%. This transaction represents the largest ever Accelerated Book Building (ABB) done in the MENA region so far, reflecting the strong demand from the market.

The higher free float resulted in a higher weight in FTSE indices and is expected to provide a pathway towards inclusion in the Morgan Stanley Capital International (MSCI) Emerging Market Index, subject to the company meeting the relevant inclusion criteria. MSCI inclusion will contribute to the diversification of the company’s investor base and significantly broaden awareness of its unique value proposition.

ADNOC Drilling’s strategy is focused on the expansion of its fleet and the development of integrated drilling services to enable ADNOC’s production capacity growth. This includes leveraging the transformational opportunities presented by the UAE’s world-class unconventional energy resources.

ADNOC Drilling has established a new company, Turnwell, to focus on the considerable opportunities in unconventional resources. This includes an initial contract to deliver 144 wells, with the potential for thousands more over time, which are incremental to the current growth guidance. Additionally, ADNOC Drilling is actively pursuing regional growth through the expansion of its operations and potential regional acquisitions.

Through its strategic joint venture with Alpha Dhabi, Enersol, ADNOC Drilling aims to acquire and invest in global energy technologies, fostering a scalable technology ecosystem to enhance market value and improve operational efficiencies. Enersol has recently acquired a 67.2% controlling stake in Gordon Technologies. The closing of the transaction is subject to customary regulatory approval, and Enersol is in the final stages of two additional transactions. These efforts focus on investments that support the UAE’s wider energy security ambitions, net-zero agenda, and ongoing economic diversification efforts. These transactions would drive additional growth for ADNOC Drilling over and above the current growth outlook.