Baker Hughes acquires 5% of UAE’s ADNOC Drilling for $550 million

The deal will enable ADNOC Drilling to gain access to the know-how and technical expertise of a global player. (Shutterstock)
Updated 09 October 2018
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Baker Hughes acquires 5% of UAE’s ADNOC Drilling for $550 million

ABU DHABI/LONDON: Baker Hughes, the world’s second-largest oil services company, will take a 5 percent stake in Abu Dhabi National Oil Company’s (ADNOC) drilling unit for $550 million under a tie-up announced on Monday.
Baker Hughes (BHGE) becomes the first foreign company to take a stake in one of state-owned ADNOC’s services companies under the agreement which values ADNOC Drilling at about $11 billion.
It will allow Baker Hughes to cement its presence in the Middle East, the fastest growing region for oil and gas operations, and enable ADNOC Drilling to gain access to the know-how and technical expertise of a global player.
Since its acquisition by General Electric Co. last year, Baker Hughes has sought new business models following a sharp decline in global drilling activity since 2014. That includes offering a suite of services to oil and gas producers from exploration to drilling.
“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,” ADNOC’s Chief Executive Sultan Al-Jaber told Reuters in an interview in Abu Dhabi.
It would help make ADNOC Drilling “the most efficient and the most competitive,” Al-Jaber said.
Baker Hughes’ CEO Lorenzo Simonelli said BHGE will have a representative on the board of ADNOC Drilling and will create a dedicated training team.
The partnership will offer drilling services in the UAE and possibly abroad as well, Al-Jaber said.
The transaction is expected to close before the end of this year, with operations starting in 2019, ADNOC and BHGE said in a joint statement.
Al-Jaber said “there are no plans at this point of time” to float a stake in ADNOC Drilling.
While analysts said the deal would bode well for Baker Hughes’ long-term prospects in the United Arab Emirates, some lamented that the firm was paying too high a price in its acquisition.
“We’re just not fans of OFS (oilfield service) companies having to ante up” to tap into revenue growth, analysts for investment firm Tudor Pickering Holt & Co. wrote in a note on Monday.
Shares of Baker Hughes were down roughly 1 percent at midday on Monday, trading around $31.65.
Moelis is acting as the financial adviser to ADNOC on the transaction, while Citi is the adviser to BHGE, the two companies said in the statement.


Libya’s National Oil against paying ‘ransom’ to reopen El Sharara field

Updated 14 December 2018
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Libya’s National Oil against paying ‘ransom’ to reopen El Sharara field

  • Ransom payment would set dangerous precedent
  • NOC declared force majeure on exports on Monday

BENGHAZI: Libya’s state-owned National Oil Corp. (NOC) said it was against paying a ransom to an armed group that has halted crude production at the country’s largest oilfield.
“Any attempt to pay a ransom to the armed militia which shut down El Sharara (oilfield) would set a dangerous precedent that would threaten the recovery of the Libyan economy,” NOC Chairman Mustafa Sanalla said in a statement on the company’s website.
NOC on Monday declared force majeure on exports from the 315,000-barrels-per-day oilfield after it was seized at the weekend by a local militia group.
The nearby El-Feel oilfield, which uses the same power supply as El Sharara, was still producing normally, a spokesman for NOC said, without giving an output figure. The field usually pumps around 70,000 bpd.
Since 2013 Libya has faced a wave of blockages of oilfields and export terminals by armed groups and civilians trying to press the country’s weak state into concessions.
Officials have tended to end such action by paying off protesters who demand to be added to the public payroll.
At El Sharara, in southern Libya, a mix of state-paid guards, civilians and tribesmen have occupied the field, camping there since Saturday, protesters and oil workers said. The protesters work in shifts, with some going home at night.
NOC has evacuated some staff by plane, engineers at the oilfield said. A number of sub-stations away from the main field have been vacated and equipment removed.
The occupiers are divided, with members of the Petroleum Facilities Guard (PFG) indicating they would end the blockade in return for a quick cash payment, oil workers say. The PFG has demanded more men be added to the public payroll.
The tribesmen have asked for long-term development funds, which might take time.
Libya is run by two competing, weak governments. Armed groups, tribesmen and normal Libyans tend to vent their anger about high inflation and a lack of infrastructure on the NOC, which they see as a cash cow booking billions of dollars in oil and gas revenues annually.