ADNOC Drilling Company (ADNOCDRILL) M&A Announcement summary

Deal rationale and strategic fit

• Acquisition of an 80% stake in MB Petroleum Services accelerates regional expansion and diversification, strengthening presence in Oman, Kuwait, Bahrain, and Saudi Arabia.

• Adds 21 rigs and expands the client base, making the company a top drilling operator in Oman and Kuwait.

• Builds on a roll-up strategy and prior partnerships, supporting both organic and inorganic growth.

• Enhances integrated offering, technology ecosystem, and access to new geographies and pre-qualifications.

• Reflects commitment to disciplined, value-driven growth and robust financial framework.

Financial terms and conditions

• 80% stake in MB Petroleum Services acquired for $204 million (AED 749 million), with some sources citing $163 million; transaction valued at less than 4x EBITDA, closer to 3.5x.

• Funded through undrawn/existing debt facilities, with no impact on dividend policy.

• Immediate accretion to earnings, cash flow, and returns upon completion, with double-digit free cash flow yield and mid to high teens IRR.

• MBPS generated $187 million in revenue and $56 million EBITDA in 2024, with a ~30% EBITDA margin.

• Option to acquire the remaining 20% stake after three years via call and put options.

Synergies and expected cost savings

• Synergies expected from combining operations with previous acquisitions, especially in Oman and Kuwait.

• Geographic and product synergies, including expansion into production services and integrated commercial proposition.

• Enhanced ability to participate in regional tenders and leverage local partnerships.

• Expected to optimize capital structure and improve operational and financial resilience.

• Acquisition expected to generate attractive returns and unlock shareholder value.