ADNOC Drilling Company held its General Shareholder Meeting and announced the approval of a new progressive dividend policy. Under this policy, the company’s dividends will grow by at least 10 percent per year on a per-share basis over the next five years, from 2024 to 2028. This progressive dividend plan ensures shareholders will receive no less than AED17.6 billion ($4.79 billion) in total profits over that five-year period.
Expected dividend yield
The expected cumulative minimum yield from this new dividend policy during the 2024-2028 period is more than 27 percent. Additionally, ADNOC Drilling’s Board of Directors may, at their discretion, approve further dividends beyond the progressive policy after considering opportunities for accretive free cash flow growth.
ADNOC Drilling's shareholders have approved a new progressive policy that will deliver a minimum of 10% annual growth between 2024 and 2028.
The approval of this enhanced dividend policy reflects ADNOC Drilling's commitment to delivering increasing value to shareholders, enabled… pic.twitter.com/uuXz2IvhDY
— ADNOC Drilling (@ADNOCDrilling) June 25, 2024
Dividend payment schedule
Dividends will be paid semi-annually, with a final dividend distributed to shareholders in the first half of each fiscal year and an interim dividend in the second half.
Commenting on the new policy, Abdulmunim Saif Al Kindy, ADNOC Upstream executive director and vice chairman of ADNOC Drilling, stated: “The approval of this enhanced dividend policy reflects ADNOC Drilling’s commitment to delivering increasing value to shareholders, enabled by an accelerated and multi-faceted growth strategy that embraces artificial intelligence, digitization, and advanced technologies both in the UAE and internationally.”
ADNOC’s share placement and implications
This announcement comes after ADNOC’s recent placement of an additional 5.5 percent of ADNOC Drilling’s share capital, increasing the company’s free float to 16.5 percent. This transaction, valued at $935 million, represents the largest-ever accelerated book-building (ABB) deal in the MENA region, reflecting strong market demand.
Potential index inclusion and investor base diversification
The higher free float is expected to increase ADNOC Drilling’s weighting in FTSE indices and potentially lead to the company’s inclusion in the MSCI Emerging Market Index, subject to meeting the relevant criteria. This would further diversify the company’s investor base and enhance global awareness of its unique value proposition.
Strategic priorities
ADNOC Drilling’s strategy is focused on expanding its fleet, developing integrated drilling services, and leveraging the UAE’s world-class unconventional energy resources. The company has established a new subsidiary, Turnwell, to capitalize on the considerable opportunities in unconventional resources, including an initial contract for 144 wells and the potential for thousands more over time.
Regional and global expansion efforts
Furthermore, ADNOC Drilling is actively pursuing regional growth by expanding its operations and exploring potential acquisitions. Through its strategic joint venture with Alpha Dhabi, Enersol, the company is also investing in global energy technologies to enhance market value and operational efficiencies, supporting the UAE’s energy security, net-zero, and economic diversification goals.
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