BHGE signs deal to buy 5% stake in Adnoc Drilling for $550m

US-based GE subsidiary Baker Hughes (BHGE) has signed a $550m strategic partnership to acquire a 5% stake in Abu Dhabi National Oil Company’s subsidiary Adnoc Drilling.

The transaction will enable BHGE to become the exclusive provider of certain proprietary equipment and technologies to Adnoc Drilling, which values the UAE-based drilling unit at $11bn.

Through the partnership, Adnoc and BHGE intend to develop Adnoc Drilling into a fully integrated drilling and well construction provider. The companies will focus on delivering competitive well completion times, greater drilling efficiencies and better well economics.

Under the agreement, a representative from BHGE will join Adnoc Drilling’s board of directors.

The partnership will allow Adnoc to realise its plan of growing its conventional drilling activity by 40% by 2025 and significantly increase the number of its unconventional wells.

Adnoc aims to increase its share in the drilling and completion market up to 30% over the next three years.

Adnoc Group CEO Dr Sultan Ahmed Al Jaber said: “We are very pleased to be partnering with BHGE in ADNOC Drilling, in line with our wise leadership’s guidance to create and enhance value across our business by forming strategic partnerships.

“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.”

Together with BHGE, Adnoc will work on achieving its target of reducing drilling time by 30% by the end of next year.

BHGE chairman and CEO Lorenzo Simonelli said: “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.

“The transaction significantly increases our activity in the region and demonstrates our unique ability to create value for our customers and shareholders through innovative commercial arrangements, partnerships and leading technology solutions.”

Completion of the transaction is slated for the fourth quarter of this year, subject to certain closing conditions, including regulatory approvals.