Oilfield services company Baker Hughes (BHGE) has negotiated a 5% stake in the Abu Dhabi National Oil Company’s (ADNOC) subsidiary ADNOC Drilling for $550m.
The deal makes BHGE the first foreign company to secure an interest in ADNOC, which is valued at around $11bn.
It will be the sole provider of equipment and technology for integrated drilling and will support ADNOC’s future development objectives.
ADNOC chief executive Sultan al-Jaber told Reuters: “To us, this is not just another partnership… this will allow ADNOC Drilling to be not only a local player but a global specialist in the drilling and oil service business.”
He added in a joint press release with BHGE: “The partnership forms an important building block of ADNOC’s 2030 smart growth strategy as we continue to drive operational efficiency and performance, and unlock even more value from every barrel we produce.
“Importantly, it will also drive job creation and economic growth, as well as maintain a healthy level of competition in the dynamic UAE oilfield services market.”
The agreement allows BHGE to gain a greater footprint in the Middle East and, in return, gives ADNOC access to BHGE’s technical expertise.
BHGE chief executive officer Lorenzo Simonelli said that the company will have one representative on the board of ADNOC Drilling.
According to al-Jaber, the partnership will employ drilling services across the UAE and possibly abroad. It will enable ADNOC to gain more value from its oil exploration business and will help the company grow its drilling activity by 40% by 2025, by increasing the number of unconventional wells.
He added that ADNOC Drilling has no plans to float a stake in the company at this time.
The two companies said in the joint statement that US-based Moelis and Citigroup will act as the financial advisors for ADNOC and BHGE respectively.
Upon completion of the deal, which is expected to close before the end of 2018, the two companies will commence joint operations next year.