Baker Hughes To Buy 5% Stake In ADNOC Drilling For $550 Mln

(RTTNews) - Baker Hughes, a GE company (BHGE), said it will acquire a five percent stake in ADNOC Drilling for $550 million. The transaction values ADNOC Drilling at about $11 billion, including about $1 billion of net debt. The deal is expected to be accretive to BHGE's earnings per share starting the first year.

Transaction includes an activity and milestone-based deferred consideration mechanism, beginning in 2023, linked to the development of ADNOC's new conventional and unconventional development program.

The transaction was approved by the Board of Directors of each company and is expected to close in the fourth quarter of 2018, subject to customary closing conditions including appropriate regulatory approvals.

Abu Dhabi National Oil Company or ADNOC or the Group and Baker Hughes, a GE company (BHGE) signed a strategic partnership agreement, that will enable and support the growth and development of ADNOC's subsidiary, ADNOC Drilling.

BHGE will be the sole provider of certain proprietary leading edge and differentiated equipment and technologies related to the integrated drilling offering, supporting ADNOC Drilling's growth.

Baker Hughes said it expects the partnership to generate predictable, long-term revenue streams and growth in the market for both companies through a mutually-beneficial, attractive commercial structure, pre-defined work plans and future dividends.

ADNOC Drilling and BHGE will set up an advisory board with representation from both companies to oversee the implementation and ongoing operations, and BHGE will join ADNOC Drilling's Board of Directors.

Baker Hughes noted that the partnership will enable ADNOC to capture more value from every barrel of oil it produces as it plans to grow its conventional drilling activity by 40 percent by 2025 and substantially ramp up the number of its unconventional wells, in line with its 2030 smart growth strategy.

ADNOC Drilling will remain the sole rig provider to ADNOC Group Companies and capitalize on ADNOC's growing upstream activity by deploying its new integrated offering to capture up to 30 percent of the drilling and completion market over the next three years, as it demonstrates increasing drilling efficiencies and improved customer service levels.