The recently announced strategic investment joint venture between Abu Dhabi’s ADNOC Drilling and Alpha Dhabi Holding has been incorporated at Abu Dhabi Global Market, and it announced the first investment in USA’s measurement while drilling (MWD) technology company, Gordon Technologies.
As the inaugural investment, Alpha Dhabi has contributed its 25 percent equity stake in Gordon, which it had acquired in 2022. The equity stake has been valued at around $180 million.
At the time of announcing the JV in November last year, the two companies had said they were looking at making investments worth $1.5 billion across the globe in energy technology and bolster tech-enabled energy services.
ADNOC Drilling holds 51 percent stake in the JV, with the remaining 49 percent held by Alpha Dhabi, with equal Board representation for both parties. ADNOC Drilling will account for the JV’s financial results through the equity method starting from its Q1 2024 financial results.
Founded in 2014, Gordon is one of the leading MWD technology provider in the USA and involved in key operating basins. The company’s expected revenue for FY2023 is approximately $230 million. It supports efficient drilling operations through leading performance metrics and cost efficiencies, and occupies a unique position, particularly in high-temperature applications.
Gordon has no leverage, and its acquisition is economically accretive to the JV’s shareholders from a profitability, valuation multiple, cash flow generation and dividend potential standpoint, along with a FY2023 expected free cash flow yield of more than 10 per cent.
The investment in Gordon is expected to bring value-accretive returns to shareholders, and will also be synergistic with ADNOC Drilling’s business.
Abdulrahman Abdullah Al Seiari, Chief Executive Officer of ADNOC Drilling, said: “Through the incorporation of our Joint Venture, we are set to accelerate investment in tech-enabled energy solutions. Access to these technologies will support us in our operations, and to accelerate well delivery optimisation in the development of unconventional resources.”
Hamad Al Ameri, Managing Director and Group CEO of Alpha Dhabi, added: “Since Alpha Dhabi’s minority stake acquisition of Gordon Technologies, we have supported its growth strategy in the US market and put the foundations in place for expansion to the Middle East region.
“Through this joint venture, and leveraging both Alpha Dhabi and ADNOC Drilling’s complimentary capabilities, we look forward to driving further value creation for our stakeholders.” The JV intends to acquire and invest in companies offering tech-enabled oilfield services solutions and foster a scalable ecosystem that will enhance market value and optimise operational efficiencies.
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