ADNOC Drilling Company

1. Company Overview & Earnings Context

ADNOC Drilling Company P.J.S.C. is an Abu Dhabi Securities Exchange (ADX)-listed drilling and oilfield services provider, delivering integrated drilling solutions across conventional and unconventional oil and gas reservoirs. The company operates onshore and offshore drilling rigs, provides integrated drilling services and expands its technological capabilities through strategic partnerships and joint ventures.

For the nine months ended September 30, 2026, ADNOC Drilling reported record revenue of USD 3.71 billion, increasing 2% year-on-year, while net profit rose 1% to USD 1.07 billion. Performance was supported by regional expansion through SLDC and MBPS, the addition of offshore island rigs and higher integrated drilling services activity. These contributions were partially offset by lower unconventional activity and the repurposing of certain rigs. EBITDA reached USD 1.66 billion, with a stable margin of 45%.

2. Financial Performance Snapshot

• Revenue: USD 3.71 billion (+2% YoY)

• Direct Costs: USD 2.35 billion (+2.1%)

• Gross Profit: USD 1.36 billion (+2.4%)

• EBITDA: USD 1.66 billion (+2%)

• EBITDA Margin: 45% (unchanged)

• General and Administrative Expenses: USD 137.4 million (+5.7%)

• Share of Joint Venture Profits: USD 22.9 million (+34.9%)

• Finance Costs: USD 81.6 million (-5.8%)

• Profit Before Tax: USD 1.18 billion (+1.3%)

• Income Tax Expense: USD 104.1 million (+3.5%)

• Net Profit: USD 1.07 billion (+1.1%)

• Net Profit Margin: 29% (unchanged)

• Basic and Diluted EPS: USD 0.0667, compared with USD 0.0663 in 9M 2025

Compared with 9M 2025:

• Revenue increased from USD 3.63 billion to USD 3.71 billion.

• Gross profit increased from USD 1.33 billion to USD 1.36 billion.

• EBITDA increased from USD 1.64 billion to USD 1.66 billion.

• Profit before tax increased from USD 1.16 billion to USD 1.18 billion.

• Net profit increased from USD 1.06 billion to USD 1.07 billion.

• Operating cash flow declined from USD 1.84 billion to USD 1.30 billion.

• Free cash flow declined from USD 1.20 billion to USD 961 million.

3. Operational Highlights & Key Metrics

• Total Assets: USD 8.79 billion

• Total Equity: USD 4.39 billion (+9% YoY)

• Net Debt: USD 2.14 billion (+23%)

• Net Debt to LTM EBITDA: 1.0x

• Return on Equity: 33%, compared with 36%

• Return on Capital Employed: 22%, compared with 25%

• Operating Cash Flow: USD 1.30 billion (-29% YoY)

• Free Cash Flow: USD 961 million (-20%)

• Free Cash Flow Before M&A: USD 978 million (-27%)

• Capital Expenditure: USD 343 million (-33%)

• Onshore Revenue: USD 1.59 billion (+5%)

• Offshore Revenue: USD 1.08 billion (+4%)

• Onshore EBITDA: USD 720 million (-5%)

• Offshore EBITDA: USD 725 million (+2%)

• Total Rig Fleet: 172 rigs

• Domestic Rig Fleet: 142 rigs

• Onshore Rigs in Abu Dhabi: 93

• Offshore Rigs in Abu Dhabi: 49

• Regional Rigs: 30 across Oman and Kuwait

• Domestic Owned Fleet Availability: 99%

• Integrated Drilling Services Rigs: 62, compared with 59 in Q3 2025

• Total Rigs Receiving Oilfield Services: 115

• New Offshore Island Rigs Added in 2026: 2

• Q3 2026 Dividend Approved: USD 350 million, approximately 8.0 fils per share

• Expected Total 2026 Dividend: USD 1.225 billion, subject to shareholder approval of the remaining discretionary tranche

The company's regional fleet expansion included eight rigs acquired through the SLDC transaction and 22 additional rigs through MBPS. ADNOC Drilling also deployed its first organically operated rig in Oman during Q3 2026, supporting its expansion beyond the UAE.

4. Key Performance Drivers

ADNOC Drilling's nine-month performance was supported by regional expansion, additional offshore drilling capacity and increased integrated drilling services activity. The consolidation of SLDC and MBPS added 30 regional rigs across Oman and Kuwait, contributing to a 5% increase in Onshore revenue to USD 1.59 billion. Offshore revenue grew 4% to USD 1.08 billion, benefiting from additional jack-up activity and the introduction of AI-enabled island rigs.

Profitability remained resilient despite changes in activity mix. EBITDA increased 2% to USD 1.66 billion, supported by operational efficiencies and a higher contribution from the Enersol joint venture. However, lower unconventional drilling activity, the repurposing of certain rigs and higher regional operating costs affected Onshore profitability, with its EBITDA declining 5% year-on-year.

Cash generation moderated during the period, with operating cash flow declining 29% to USD 1.30 billion and free cash flow decreasing 20% to USD 961 million. Management attributed the decline primarily to working capital movements, including higher inventories, lower payables and exceptionally strong collections during the comparable period in 2025. Capital expenditure declined 33% to USD 343 million, reflecting the timing of fleet investments.

The company also continued implementing its Drill-to-Operate strategy, focusing on integrated services, advanced drilling technology, artificial intelligence and regional partnerships to improve drilling efficiency and capture additional value across the well lifecycle.

5. Outlook & Forward Guidance

ADNOC Drilling reaffirmed its full-year 2026 guidance, targeting approximately USD 5.0 billion in revenue, USD 2.2 billion in EBITDA and USD 1.45 billion in net profit. Management expects an EBITDA margin of approximately 44% and a net profit margin of approximately 29%, with free cash flow excluding acquisitions projected between USD 1.2 billion and USD 1.3 billion.

The company expects continued expansion in its drilling fleet, with four additional AI-enabled island rigs scheduled to join during 2027, primarily in the second half of the year, subject to timely delivery. Growth is expected to be supported by increasing oilfield services activity, regional expansion, technology adoption and continued investment in the UAE's energy infrastructure.

For 2027, management anticipates low-to-mid-single-digit revenue growth, broadly stable EBITDA margins and net profit remaining approximately unchanged from 2026, reflecting higher depreciation and financing costs.

ADNOC Drilling also strengthened its shareholder distribution outlook, with expected total dividends of USD 1.225 billion for 2026, representing a 22.5% increase over 2025, subject to approval of the second discretionary dividend tranche. Its progressive dividend policy provides for a minimum annual increase of 5% through at least 2030.

6. Investor Takeaway

ADNOC Drilling delivered resilient 9M 2026 results, with record revenue of USD 3.71 billion, EBITDA of USD 1.66 billion and net profit of USD 1.07 billion. Regional acquisitions, offshore fleet expansion and integrated drilling services supported growth, while lower unconventional activity and working capital movements weighed on profitability growth and cash generation.

With a fleet of 172 rigs, strong domestic fleet availability of 99% and reaffirmed full-year guidance, the company maintains a substantial operational platform for future growth. Its enhanced dividend outlook also strengthens its income proposition for shareholders.

Looking ahead, investors should monitor regional expansion, offshore rig deployment, oilfield services growth, EBITDA margins, free cash flow recovery and the company's ability to achieve its 2026 financial targets while maintaining its progressive dividend commitments.