AI-enhanced newbuild rig trio enlarging UAE giant’s drilling fleet thanks to $733 million oil field gig

UAE-based ADNOC Drilling has tucked a new multimillion-dollar assignment under its belt with ADNOC Offshore, a compatriot oil and gas heavyweight, for drilling work at a huge oil field located approximately 84 km northwest of Abu Dhabi and 50 km from Zirku Island. This will enable the drilling player to expand its rig arsenal with three newbuilds, resulting in a 148-strong rig fleet.  

The contract award with ADNOC Offshore will bring the UAE driller around $733 million for three island drilling rigs, which will be employed to support the growing operations at the Zakum oil field off the coast of the UAE.

The rig trio, which will operate on existing and newly constructed innovative artificial islands at the Zakum offshore field for drilling and completion of wells, brings above medium-term guidance with accretive day rates, enhancing long-term contracted cash flow and earnings visibility, according to ADNOC Drilling.

Tayba Abdul Rahim Al Hashemi, Chief Executive Officer of ADNOC Offshore, highlighted: “ADNOC Drilling’s technical expertise and enhanced capabilities are key enablers as we safely and sustainably accelerate to meet the world’s growing energy demands.

“This award will strengthen our partnership in the future as we work together to harness AI and innovation to maximize energy, minimize emissions and unlock significant value for stakeholders.” 

ADNOC Drilling hired Honghua Group (HH) to build the rig trio, which will be enriched with technology and automation, as part of a partnership between the two players, formed to harness the transformative nature of AI, digitization, and advanced technology in the design and operation of these next-generation drilling units.

The rig’s operating systems design is expected to utilize real-time condition, performance, and utilization data to create actionable insights, enhancing performance and increasing efficiency to unlock improvements in safety and well delivery times.

The rig owner explains that drilling operations at its artificial islands create the ideal conditions for extended reach drilling (ERD), as the top five longest wells in the world are said to have been delivered from these islands off the coast of Abu Dhabi, with the most recently delivered one being over 52,000 feet.

Abdulrahman Abdulla Al Seiari, Chief Executive Officer of ADNOC Drilling, commented: “ADNOC Drilling is honored to receive this substantial award, which marks a significant milestone in our company’s accelerated growth journey. These new island rigs will be the most advanced in the world, embracing artificial intelligence, the most transformative technology of our generation.”

These rigs will not only be built to deliver ERD but also to walk between wells to eliminate the need for dismantling activities during rig moves, boosting efficiency and safety while reducing costs and emissions.

The delivery of the three new rig additions to the UAE player’s fleet and their start of drilling operations are anticipated during 2026. ADNOC Drilling and HH also intend to explore a collaboration with AIQ, an Abu Dhabi-based artificial intelligence (AI) firm contributing to the energy sector globally.

“Our partnership with HH will amplify the creativity and ingenuity of our industry as we design and build these rigs of the future that drive efficiency and safety and deliver exceptional value for our customer ADNOC Offshore,” added Al Seiari

While the total capital expenditure for the rig acquisition is about $210 million, mostly concentrated in 2025, with the first full-year revenue from the new rigs expected to be in 2027, the full-year 2024 guidance of $200-250 million for the island rig segment, which currently operates 10 island rigs, is unchanged.

Taking into account the latest rig trio, ADNOC Drilling’s fleet is now expected to total at least 148 rigs by 2026, including the previously announced three land units for the initial phase of the unconventional development. The UAE player has invested over $2.2 billion in building its integrated drilling fleet since the fourth quarter of 2021.

ADNOC Offshore manages nine fields encompassing the Upper Zakum, Lower Zakum, Umm Shaif, Satah, Nasr, Umm Al Dalkh, Sarb, Umm Lulu, and Abu Al Bukhoosh. The firm’s operations also extend to terminals at Das Island and Zirku Island where the UAE giant processes, stores, and exports crude oil. 

The company handed out a $975 million artificial island construction contract to ADNOC Logistics & Services last year, as part of its long-term development plan for the Lower Zakum field offshore Abu Dhabi.

In addition, ADNOC Offshore awarded another deal in September 2022 to build a new main gas line to enable the field’s gas production capacity to rise from 430 million to 700 million standard cubic feet per day (MMSCFD).