US rm Baker Hughes pays $400m for mi­nor­ity stake in UAE’s Ad­noc Drilling

Construction Week - - FINANCE -

Oil ser­vices provider Baker Hughes has agreed to buy a 5% stake in Abu Dhabi Na­tional Oil Com­pany’s (Ad­noc) drilling sub­sidiary, as part of a ma­jor part­ner­ship that will cre­ate a con­struc­tion-fo­cused oil busi­ness.

The agree­ment will see Ad­noc Drilling be­come “a fully in­te­grated drilling and well con­struc­tion provider”, worth $11bn (AED40.4bn), and po­si­tions the com­pany for ma­jor growth, in­clud­ing ge­o­graphic ex­pan­sion out­side of the UAE.

Ad­noc’s deal with Baker Hughes marks the first time that the UAE oil gi­ant has in­vited an in­ter­na­tional part­ner to ac­quire a di­rect eq­uity stake in one of its ser­vice busi­nesses.

Both par­ties say the deal will de­liver “more com­pet­i­tive well com­ple­tion times, greater drilling ef­fi­cien­cies, and bet­ter well eco­nom­ics” for the firms. Op­er­a­tions will com­mence in 2019, and the com­mer­cial frame­work ac­counts for Baker Hughes’s work­ing cap­i­tal re­quire­ments and equip­ment lead times, in­clud­ing mile­stone pay­ments.

The part­ner­ship will see Ad­noc move closer to its tar­get of a 30% re­duc­tion in drilling time by the end of 2019.

Mean­while, Baker Hughes, a Gen­eral Elec­tric com­pany, will re­ceive a seat on Ad­noc Drilling’s board of direc­tors.

An ad­vi­sory board with rep­re­sen­ta­tion from both com­pa­nies will be cre­ated to oversee the agree­ment’s im­ple­men­ta­tion and on­go­ing op­er­a­tions. The ac­qui­si­tion is still sub­ject to reg­u­la­tory ap­provals and is ex­pected to get the green light be­fore the end of the year.

HE Dr Sul­tan Ahmed Al Jaber, the UAE’s Min­is­ter of State and Ad­noc Group’s chief ex­ec­u­tive of­fi­cer, said the deal will “drive job cre­ation and eco­nomic growth, as well as main­tain a healthy level of com­pe­ti­tion in the dy­namic UAE oil­field ser­vices mar­ket”.

Mean­while, Lorenzo Si­monelli, chair­man and chief ex­ec­u­tive of­fi­cer of the US com­pany, added: “[The agree­ment] al­lows us to drive pre­dictable rev­enue streams and longterm growth for both com­pa­nies, and lets us in­vest in a sta­ble, re­li­able, and se­cure mar­ket en­vi­ron­ment.”

Ad­noc HQ, UAE.

Newspapers in English

Newspapers from UAE

© PressReader. All rights reserved.