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Baker Hughes takes USD 550mn stake in ADNOC Drilling
Posted on Tuesday, 09 October 2018 13:32
General Electric’s Baker Hughes is acquiring a 5.0 per cent in ADNOC Drilling in a USD 550.00 million-tie up that values Abu Dhabi National Oil’s (ADNOC’s) subsidiary at about USD 11.00 billion, including USD 1.00 billion of net debt. According to Zephyr, the M&A database published by Bureau van Dijk, the minority stake purchase is among the top 100 by value targeting a global oil and gas well drilling company and provider of related support services on record. In terms of these type of deals in the Middle East and Africa, it accounts for the fourth-largest by value as Baker Hughes takes a gamble on gaining exposure to one of the world’s largest hydrocarbon super-basins. ADNOC Drilling is the largest provider of rigs and associated services in the Middle East, with its fleet of land, jackup and island platforms having helped establish over 7,200 on-and off-shore wells, according to the website. Baker Hughes will not only take an equity stake but also enter into a partnership aimed at driving significant and predictable long-term earnings streams for both companies. The tie-up will also let ADNOC Drilling “capture more value from every barrel of oil it produces as it plans to grow its conventional drilling activity by 40.0 per cent by 2025”, while allowing the US player to extend its presence in the UAE. It should also generate predictable, long-term revenue streams and growth in the market for both through a mutually-beneficial, commercial structure, pre-defined work plans and future dividends. ADNOC Drilling will be able to gain greater market access and new business opportunities, such as increasing the number of wells required, as well as expanding regional services to hit a target of cutting drilling time by 30.0 per cent by the end of 2019. The deal represents”the first time that ADNOC has brought an international strategic partner to acquire a direct equity stake in one of its existing services businesses”. © Zephus Ltd