Investment Rating - The report assigns an "Outperform" rating to ADNOC Drilling, indicating an expected relative performance exceeding the benchmark index by over 10% in the next 12-18 months [1]. Core Insights - ADNOC Drilling is positioned as the exclusive drilling service provider for the Abu Dhabi National Oil Company (ADNOC) and aims to support ADNOC's strategic goal of achieving a production capacity of 5 million barrels per day by 2027 [2][3]. - The company has a strong focus on sustainable operations and energy optimization, deploying hybrid land drilling rigs equipped with battery storage systems to enhance efficiency and reduce fuel consumption [2]. - ADNOC Drilling has established a progressive dividend policy, targeting a compound annual growth rate of at least 10% in dividends from FY2024 to FY2028, with an expected dividend of at least $867 million for FY2025 [3][4]. Summary by Sections Company Overview - ADNOC Drilling is headquartered in Abu Dhabi and is the sole drilling service provider for ADNOC, with ADNOC holding 78.5% of its shares [2]. - The company is expanding its operations beyond the UAE, having secured pre-qualification in Kuwait and Oman, and is already operational in Jordan [2]. Financial Performance - ADNOC Drilling boasts the highest profit margins in the global oil service industry, with an EBITDA margin of approximately 50%, compared to the industry average of around 18% [3]. - The company has long-term contracts with ADNOC that guarantee minimum returns, with offshore rigs expected to yield an internal rate of return of 11%-13% and onshore rigs between 10%-12% [3]. Growth Strategy - The company is actively expanding its fleet, with plans to increase its total number of rigs from 142 by the end of FY2024 to over 151 by FY2028 [6]. - ADNOC Drilling is also progressing on unconventional drilling projects, with eight rigs currently operational and plans for further expansion based on demand [4]. Market Position - ADNOC Drilling is recognized as one of the fastest-growing energy service companies globally, leveraging its unique business model and operational efficiencies [1][3]. - The company maintains collaborative relationships with Chinese oil service firms, viewing them as partners rather than competitors [6].