BofA Global Research revised its price objective and estimates for Adnoc Drilling (ADX:ADNOCDRILL) amid the United Arab Emirates' plans to increase its oil production capacity following its exit from the Organization of the Petroleum Exporting Countries and OPEC+.
"Amid the recent increase in activity across the UAE energy sector, ADNOC Drilling stands out as the only company providing drilling services to ADNOC across both onshore and offshore oil and gas development. Beyond its growth profile, the company offers a high degree of earnings resilience through its long-term, IRR-linked, take-or-pay contracts with ADNOC, a strength that has been demonstrated during periods of regional conflict and uncertainty," the research firm said in a MENA Oil and Gas & Utilities report published Wednesday.
"We see three key near-term catalysts for the stock: (1) Final Investment Decision (FID) on the second phase of ADNOC's unconventional resource development, (2) the addition of new rigs to support ADNOC's production increase, and (3) potential dividend increases driven by growing free cash flow generation."
The price objective was raised to 7.2 Emirati dirhams from 6.9 dirhams, while the stock's buy rating was retained.
Meanwhile, the EBITDA estimate for 2026 was lifted by 2.4%, while that for 2027 was reduced by 2.2%, as analysts took into account Adnoc Drilling's second-quarter 2026 results and management's updated expectations for 2027.