ADNOC Drilling Company (ADNOCDRILL) Q2 2024 earnings summary

Executive summary

• Achieved record-breaking results in H1 and Q2 2024, with strong growth in revenue, EBITDA, and net profit, driven by fleet expansion, OFS growth, and cost efficiencies.

• Interim dividend increased 10% year-on-year to $394 million, with a new progressive policy targeting at least 10% annual growth through 2028.

• Strategic growth avenues include Enersol acquisitions, Turnwell JV, expansion into unconventionals, and regional expansion, notably pre-qualification in Kuwait and Oman.

• Enhanced ESG performance with ambitious decarbonization and safety targets, including hybrid rigs and electrification initiatives.

• Free float increased by 5.5% via secondary share sale and $935 million institutional placement, boosting liquidity and index inclusion prospects.

Financial highlights

• Q2 2024 revenue was $935 million, up 29% year-on-year and 6% sequentially; H1 2024 revenue reached $1.82 billion, up 26% year-on-year.

• Q2 EBITDA was $472 million, up 37% year-on-year and 8% sequentially; H1 EBITDA was $909 million, up 34% year-on-year, with a 50% margin.

• Q2 net profit was $295 million, up 29% year-on-year and 7% sequentially; H1 net profit was $570 million, up 28% year-on-year.

• Cash flow from operations in Q2 was $518 million, up 31% year-on-year; H1 cash generated from operations was $865 million, up 39% year-on-year.

• CapEx for Q2 2024 was $234–239 million, up 32% year-on-year, mainly for rig additions.

Outlook and guidance

• FY2024 revenue guidance raised to $3.7–$3.85 billion; EBITDA $1.8–$1.95 billion with 49–51% margin; net profit $1.15–$1.3 billion.

• Medium-term revenue CAGR guidance increased to 14–18% from 2023 base, driven by new rigs, OFS growth, and unconventionals.

• Maintenance CapEx post-2024 projected at $200–$250 million per year; leverage target below 2.0x net debt/EBITDA.

• Net working capital to revenue ratio targeted at around 12%.

• Q3 revenue and EBITDA expected to grow mid-single digits sequentially; H2 2024 to exceed H1.