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, and aligns with a disciplined, value-driven growth strategy.

• Builds on a roll-up strategy and prior partnerships, providing access to 21 rigs and OFS contracts with national oil companies in four countries.

• Enhances integrated offering and technology ecosystem, supporting growth beyond Abu Dhabi and reinforcing position as a key energy services provider in the Gulf.

• MBPS is a key OFS player in the Middle East, well-positioned with local relationships and a strong operational track record.

• Provides access to new geographies and pre-qualifications, enabling further expansion of services and market reach.

Financial terms and conditions

• 80% stake in MB Petroleum Services acquired for an enterprise value of $204 million (AED 749 million), with other sources citing $163 million; funded through existing or undrawn debt capacity.

• Implied entry multiple is less than 4x 2025E EV/EBITDA, closer to 3.5x, with a double-digit free cash flow yield and payback within a short timeframe.

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

• Immediate accretion to earnings, cash flow, IRR (mid to high teens), and return on equity upon completion.

• Mechanism in place for call and put options to acquire the remaining 20% stake after three years.

Synergies and expected cost savings

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

• Geographic and product synergies, including expansion into production services like well testing.

• Expected to optimize capital structure, improve returns, and unlock shareholder value.

• Enhances operational and financial resilience, enabling navigation of market cycles.

• Enhanced ability to participate in tenders and expand oilfield services in new markets.