The Abu Dhabi National Oil Company “ADNOC” announced today its intention to offer a 7.5% stake in the shares of “ADNOC Drilling” for an initial public offering on the Abu Dhabi Securities Exchange.
A strong boost to the energy sector in the region
Junaid Ansari, head of investment research and strategies at Kamco Invest, told Al-Roya that the announcement of the initial public offering of ADNOC’s drilling unit on the Abu Dhabi Securities Exchange comes as an important development for the stock exchange and will be one of the highlights of the strength of the oil and gas sector in the region.
He pointed out that since it is the largest drilling company in the region, the IPO will also give the exchange a major boost to its efforts to double the market value within 3 years, expecting that the exchange will be able to achieve this goal much earlier than originally planned.
strategic timing
The head of KAMCO Research noted that the timing of the subscription is also a strategic factor, given the current high valuations in global stock markets, which have reached a record level, and Abu Dhabi is one of the best performing stock markets in the world this year.
He continued: “With oil prices rising to over $70 per barrel, we can expect significant investor interest in the IPO, both from the region and internationally, and the final valuation could exceed the $11 billion recorded in 2018 upon the sale of the stake. For Baker Hughes Company.
high demand
A member of the Advisory Board at the Chartered Institute for Securities and Investment, Wadah Al-Taha, confirmed to Al-Roya that the current time in which ADNOC decided to offer part of a subsidiary company is very appropriate for conducting initial offerings, and indicates ADNOC’s intelligence, pointing out that despite The percentage to be offered in the Abu Dhabi market by ADNOC Drilling is small, which will lead to more disclosure and compliance with market laws.
Al-Taha pointed out that ADNOC’s drilling offering is expected to witness a great demand, with the support of ADNOC Distribution’s good reputation and the value it has given to the Abu Dhabi market.
He added that the attractive offering price of ADNOC Drilling will lead the stock to strong rises at the beginning of trading.
Al-Taha expected that ADNOC Drilling would support the energy sector in the Abu Dhabi market, with expectations that it would lead the sector to receive more initial offerings in the future.
He pointed out that the significant increases witnessed by the Abu Dhabi market in the first half, with the momentum of liquidity, which rose during the period by about 620% compared to the same period last year, may encourage many companies to conduct initial offerings.
ADNOC Drilling is one of the most important pillars of the ADNOC Group and a key enabler to sustain the current production rates of crude oil and increase its production capacity by 25% to reach 5 million barrels per day, and produce one billion cubic feet per day of unconventional gas by 2030.
The subscription will be open to citizens and residents of the UAE and local and international investment institutions, and is expected to start on September 13, 2021.
ADNOC Drilling is the largest national drilling company in the Middle East in terms of the size of the fleet of platforms and equipment, with a total of 96 rigs, onshore, offshore and dedicated to artificial islands. Thanks to its strategic partnership with Baker Hughes in 2018, ADNOC Drilling became the first national company in the region to provide integrated services for drilling and preparing wells and a full range of drilling and drilling services, providing it with opportunities to grow and expand its business outside the UAE.
Through this proposed offering of a minority stake in ADNOC Drilling, ADNOC provides an attractive investment opportunity that allows investors to benefit from the continuous development and strong growth of ADNOC Drilling, which is a major component of ADNOC’s operations and the value chain of hydrocarbon resources in Abu Dhabi. ADNOC Drilling also has a long-term contractual relationship with the ADNOC Group companies in the field of exploration, production and development, which ensures the continuity and stability of its operations in various circumstances.
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