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.


Can a hungry Mali turn rice technology into ‘white gold’?

Updated 20 October 2018
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Can a hungry Mali turn rice technology into ‘white gold’?

  • Malians are cautiously turning to a controversial farming technique to adapt to the effects of climate change
  • Dubbed the System of Rice Intensification (SRI), the new method was pioneered in Madagascar in 1983

BAGUINEDA: When rice farmers started producing yields nine times larger than normal in the Malian desert near the famed town of Timbuktu a decade ago, a passerby could have mistaken the crop for another desert mirage.
Rather, it was the result of an engineering feat that has left experts in this impoverished nation in awe — but one that has yet to spread widely through Mali’s farming community.
“We must redouble efforts to get political leaders on board,” said Djiguiba Kouyaté, a coordinator in Mali for German development agency GIZ.
With hunger a constant menace, Malians are cautiously turning to a controversial farming technique to adapt to the effects of climate change.

 

Dubbed the System of Rice Intensification (SRI), the new method was pioneered in Madagascar in 1983. It involves planting fewer seeds of traditional rice varieties and taking care of them following a strict regime.
Seedlings are transplanted at a very young age and spaced widely. Soil is enriched with organic matter, and must be kept moist, though the system uses less water than traditional rice farming.
Up to 20 million farmers now use SRI in 61 countries, including in nearby Sierra Leone, Senegal and Ivory Coast, said Norman Uphoff, of the SRI International Network and Resources Center at Cornell University in the US.
But, despite its success, the technique has been embraced with varying degrees of enthusiasm. Uphoff said that is because it competes with the improved hybrid and inbred rice varieties that agricultural corporations sell.
For Faliry Boly, who heads a rice-growing association, the prospect of rice becoming a “white gold” for Mali should spur on authorities and farmers to adopt rice intensification.
The method could increase yields while also offering a more environmentally-friendly alternative, including by replacing chemical fertilizers with organic ones, he said.
He also pointed out that rice intensification naturally lends itself to Mali’s largely arid climate.

FACTOID

Up to 20 million farmers now use rice intensification in 61 countries, including in nearby Sierra Leone, Senegal and Ivory Coast.