Operator: Welcome to the ADNOC Gas Q3 2026 Earnings Call. Following the formal presentation, there will be a question-and-answer session. During Q&A, participants will be able to ask both text and live audio questions. To ask a text question, select the messaging icon, type your question in the box towards the top of the screen, and press the send button. To ask a live audio question, press the request to speak button at the top of the broadcast window. The broadcast will be replaced by the audio questions interface. Press join queue, and if prompted, select allow in the pop-up to grant access to your microphone. Please note that if you are using the dial-in number, press star 1 to join the queue to speak. In both instances, you will be placed in a queue where you will be able to listen to the meeting's proceedings while you wait for your turn to speak.
Operator: I will introduce each caller and ask you to go ahead with your questions. Thank you. I will now hand over to Richard Griffith for the formal presentation.
Richard Griffith: Good afternoon, good morning, and thank you all for joining ADNOC Gas's third quarter 2026 results call. My name is Richard Griffith, and I am the Head of Investor Relations. Before we begin, please note the disclaimer on slide 2. Today's presentation may contain forward-looking statements which involve risks and uncertainties, and actual results may differ materially. Financial information includes ADNOC Gas's proportionate consolidation of joint venture results unless otherwise stated, and EBITDA is a non-IFRS measure. The reconciliation to the IFRS statements is set out in our management discussion and analysis report. With me today are our Chief Executive Officer, Fatema Mohamed Al Nuaimi, and our Chief Financial Officer, Peter van Driel. Fatema will open with a summary of the quarter's highlights and our growth program progress. Peter will then walk through the financial performance and our outlook, and we will close with the Q&A. Fatema, over to you.
Fatema Mohamed Al Nuaimi: Thank you, Richard, and good day to everyone. The third quarter was defined by three things: an earnings rebound, operational excellence, and commercial agility. First, earnings rebounded strongly. Net income reached $1.34 billion, doubling quarter-on-quarter. Domestic sales grew 20% on the previous quarter, whilst also capturing higher margins. Export volumes, which include export traded liquids and LNG, grew 72% as shipping activities improved, which also resulted in improved realizations. Second, operationally, by September, every available operational asset was back to 100% production. Restoration of gas supply at Habshan is progressing ahead of schedule. Our major growth projects reached key milestones, and we signed a new LNG contract with TotalEnergies. Third, our cash flow remains resilient. Year-to-date operating cash flow of $3.82 billion more than covers the $2.82 billion of dividend payments for the same period.
Fatema Mohamed Al Nuaimi: Our balance sheet capacity supports funding for the $28 billion growth program. On the strong Q3 performance, we are raising our 2026 full-year net income guidance to more than $4 billion. The quarter was driven by three factors: improved shipping conditions, recovery at Habshan, and the strong sulfur prices. On the left side of this slide, you can see sales gas output recovering steadily from its April low, up 13% quarter-on-quarter, with September the strongest month of the year so far. In the middle, shipping activities has recovered significantly. The number of loaded vessels more than doubled quarter-on-quarter, and by September, cargo movements were back to 88% of their 2025 level. On the right, sulfur prices increased dramatically from May onwards, and Q3, we were able to capture this price appreciation. Together, these factors drove the Q3 net income of $1.3 billion net income.
Fatema Mohamed Al Nuaimi: We remain firm on track to deliver our growth. At Ruwais LNG, we installed the first two 75 megawatt main refrigerations compressors trains, a significant step towards becoming the first all-electric LNG facilities in the MENA region. Also, phase 3 of the Rich Gas Development Program is now underway following groundbreaking at Ruwais NGL Train 5. The train will unlock value by increasing recovery of higher value export products. For Estidama project, the first gas compression train has completed startup and mechanical run test at our Habshan facilities. Estidama supports the UAE's gas self-sufficiency by targeting new customers in the Emirates. On the commercial side, we signed a five-year agreement with TotalEnergies to supply up to 1.6 million ton per annum of LNG. I would like to spend a moment on Habshan because the team's performance here has been exceptional.
Fatema Mohamed Al Nuaimi: Following the emergency shutdown on 8 April, we moved from a total shutdown to around 85% of supply in 43 days, earlier than planned. Early recovery began in April, and by June, 85% of supply had been restored. Our optimized schedule now restores pre-war capacity ahead of the original restoration plan in the middle of the year 2027. Technology made a real difference. AI-driven inspection delivered 75% faster inspection across 600 kilometers of pipeline, saving 28 days of inspection times. We produced 38 compressor-related parts through 3D printing, saving 180 days of lead time, and AI-based inspection covering 45% of the field, which resulted in a safe startup. Looking further ahead, we remain committed to delivering an EBITDA uplift of more than 60% by 2030 compared to 2023.
Fatema Mohamed Al Nuaimi: This volume-led growth, gas processing rises by around 45% from the 3.56 TBtu in 2023 to around 5.2 in 2030, and EBITDA from $7.6 billion to $12.2 billion in a scenario of $70 oil prices. This ambitious plan is underpinned by $28 billion of committed CapEx across our projects in execution, MERAM, Rich Gas Developments phases 1, 2, and 3, and of course, Ruwais LNG, while Bab Gas Cap remains in the pre-FID phase. Finally, despite the disruption to our business, this year we have continued to generate very strong operating cash flow in the first nine months that more than covers our dividends commitment for the same period. We generated $3.82 billion of operating cash flow versus $2.82 billion in dividends.
Fatema Mohamed Al Nuaimi: At the end of the Q3, we held $1.2 billion of net cash and have $6 billion of committed credit facilities with debt capacity of up to 2x EBITDA. We remain confident that our balance sheet capacity and cash flow from operations are able to fully fund both our growth ambitious and our dividend growth of 5% per annum to 2030. With that, I will hand over to Peter to take you through the financial performance in more details.
Peter van Driel: Thank you, Fatema, and good day, good afternoon to everybody. Our net income doubled quarter-on-quarter, and that is 101% to be precise, up from the $665 million that we delivered in Q2 to the $1,336 million in Q3. It is a strong performance across all businesses, and that is driven by operational excellence and commercial agility. Domestic gas added $199 million compared to Q2 in the Q3, and the $199 million extra net income for domestic gas, that really reflects a stable year-on-year UAE demand, coupled with stronger margins, and also supported by our gas-to-electrons. The export traded liquids and LNG combined added $251 million, and that is because we had improved shipping conditions, and they were supported by higher export volumes, and also, we were able to capture the favorable market price environment.
Peter van Driel: Last but not least, sulfur and other items, they contributed a further $224 million, and that was mainly driven by higher volumes and again, the strong pricing environment for sulfur. Let us go to the next slide. So, you have seen these slides before. We show the sales quantities, top left, and then the EBITDA and the net income margins. Domestic gas EBITDA rose 28% Q1 to $878 million. The sales volumes increased 20% quarter-on-quarter towards 513 TBtu. And that was on the back of the Habshan restoration progressing ahead of schedule, and CEO mentioned this. And also, don't forget Q3, the positive impact of seasonal demand in the UAE. That demand was quite resilient in my view, year-on-year.
Peter van Driel: But, if you look at the comparison year-on-year, you will still see that it was a lower volume of 19%, and that is mainly driven also by our reinjection volumes. Also in the UAE, the margin was strong. What happened in the Q3? More demand, and that leads to higher tier pricing, particularly for the power sector. Then again, we benefited from gas-to-electric sales, and that lifted in total the net income for the domestic markets to $1.3 per MMBtu. And that compares to $1.13 in the Q2. So you see that increase in margins as well. Again, pricing, higher tier price, and gas-to-electric. Now, let us look at the exports. And we start with reviewing the pricing. The pricing overall quite supportive for the environment we operate in, and you can see that also in October already, that supportive environment continued.
Peter van Driel: If you start with Brent, in the first quarter, the average was $96. That is about 40% higher year-on-year, although 7% lower than what we saw in Q2. I have added October on the slide, you can see it is back to $108, so quite some volatility there. JKM, the benchmark for LNG, did $80.9 MMBtu, and that is 51% up year-on-year, and 8% Q-on-Q. LPG, important large chunk, the majority of our export revenues, averaged $621 per ton, and that is 90% up year-on-year, but down 20% Q-on-Q. Sulfur stood out. It was now in the third quarter, it averaged $1,000 per ton, and that is 268% year-on-year, and 30% Q-on-Q. I mentioned before, that is quite a driver for our performance in the third quarter.
Peter van Driel: Okay, now we go to the next slide, and it says again the volumes, EBITDA, and margins. The higher volumes drove strong recovery in our export and traded liquids and also the LNG. The EBITDA more than doubled, so it is 106% Q-on-Q, and we ended with $906 million. The sales volumes, they went up by 72% Q-on-Q, and we ended the quarter with 235 trillion of BTU. That is on the back of freight performance, shipping disruptions easing. If we look year-on-year, you see that the reduction is about 26%. The realized prices, so that is at the bottom left, increased despite the benchmarks in certain cases coming down, and that reflects the netbacks that you see occurring in the market.
Peter van Driel: The margins improved to $172 per MMBtu for ETL, and $215 for our LNG sales, where we went up from $123 to $129 respectively. You see it on the slide, the upticks. Let us go to the next one. Cash generation. We started the year with a strong balance, right? I think that is the takeaway from the slides. The cash generation remains extremely resilient in this environment, and of course covers the dividends. If we look at cash flow before, operating cash flow before working capital, it fell in the first nine months from $4,891 million to $4,302 in the first nine months of the year 2026. The lower EBITDA reduced the cash flows by $1,445 million, but that was partially offset by lower taxes, of course, and other items.
Peter van Driel: If you then look at what happened after working capital, the outflow of $486 should be noted, and that gives us a total for the period of $3.8 billion. We made the statement before, it compares very favorably with the dividends that we have declared in the first nine months of this year. Next slide. The outlook. The outlook today, we expect net income to be at least $4 billion, all right? Previously, I am sure everybody is aware of that, we guided for $3.5 billion to $4 billion of net income. So we have reached in our outlook the end of the range, and actually we think we can exceed that range. Hence, we believe that the guidance should be at least $4 billion. Of course, as always, there are many uncertainties in this environment. We have discussed this at length.
Peter van Driel: I still believe that what we have done in Q2 and Q3, where we guided for $400 to $600 million in Q2 and $600 to $800 million in Q3, is the right thing to do, albeit that it is not that easy in light of the operating environment in today's world. But for now, more than $4 billion for the full year is what we expect. Next slide. In more detail, right? You are probably familiar with this slide. We provided the updated ranges, so you can compare it now with first three quarter actuals and then the outlook for the full year. We still believe that the domestic gas profits will be high end. If you look at the guidance, 1,950 to 2,000, then you compare that with the first three quarters. Again, this is three quarters on the left, full year on the right.
Peter van Driel: The same if you look at the exported traded liquids, the range 680 to 740, which compares to three quarters of 57, and the same for the LNG, where we expect for the full year 175 to 150 MMBtu of sales volumes. Margins. Domestic gas. Again, there is always, A, the seasonality to take into account for the Q4, and the gas-to-electrons, which is operating via a tender, and hence creates some uncertainty in our results. But if you look then at the exports and the traded liquids, the full year guidance, 150, 165, actuals 156, 157, so that is the midpoint. The same you can see is for the LNG. Last one, at least look at sulfur, right? So in three quarters, we did 462. Full year, we expect $600 to $720 million for the full year. Last but not least, CapEx.
Peter van Driel: We kept it at $5 billion for the full year. In the first three quarters, nine months, we spent $3.7 billion. So, I hope this gives you visibility for the remainder of the year. I think with that, I hand over back to Richard Griffith for the Q&A.
Richard Griffith: Thank you, Peter. Operator, please open the lines for questions.
Operator: We will now proceed with the Q&A session. As a reminder, participants can ask both text questions and live audio questions. To ask a text-based question, please select the messaging icon, type your question in the box towards the top of the screen, and press the send button. If you wish to ask a live audio question, press the request to speak button at the top of the broadcast window. This will be replaced by the audio questions interface. Press join queue, and if prompted, select allow in the pop-up to grant access to your microphone. If you are using the dial-in number, please remember to press star 1 to join the queue to speak. Once you are in the queue, you can listen to the meeting's proceedings while you wait for your turn to speak.
Operator: I will introduce each caller, and you may go ahead once you hear a beep indicating that your microphone is live. We do have a dial-in question on the line to start. You are now live. Feel free to introduce yourself, and please go ahead with your question.
[Analyst] (BNP Paribas): Hey. Can you hear me? Hello?
Peter van Driel: Hello.
[Analyst] (BNP Paribas): Oh, hi. Thanks for taking my questions. This is Alexandra from BNP Paribas. Sorry for the delay there, I couldn't hear the beep. My first question is on the potential for an additional LNG export facility in Fujairah. I understand that no decision has been made yet, but what needs to change for a decision to be made on that potential project? Secondly, in your slides, you talk about the number of loaded vessels in September, that they were in line with February levels. Would you guide us to flows in October and November, and any change to the nature of these flows, or are ship-to-ship transfers still the main bottleneck? Thanks very much.
Peter van Driel: It's challenging where to start. We are a company that is about growth and servicing the needs of our customers. The investment case, I think, is very strong. You need to believe in the growth in demand of gas, in particular Asia and the UAE. As a company, we have a huge funnel of opportunities to meet this growth in demand. Several opportunities exist. They are often, if they are committed and FID'd, we inform the market, but in that funnel, there are several opportunities, and we assess them. Sometimes that occurs in cooperation with ADNOC, we do it ourselves, ADNOC Gas, it depends on the size. Nothing at this very moment is decided, nothing is committed, and when we have news, we will come back to you to inform you accordingly. Then the second question was about the volumes, I think, right?
Peter van Driel: Maybe we can go back to the slide with the sales volumes in the export market, where you saw the 3 slides, that's the second or the third slide, where you see basically what are the drivers for the results in Q3. Now, the first driver, of course, is what happened, and I mentioned that before, the sulfur sales. You see that? Then we also helped you with showing how the number of vessels month by month across the Strait of Hormuz has increased. For now, I don't want to look forward. This is something that I don't have a magic ball, excuse my language, to predict that, right? So we simply go by what we know today. That is also where the outlook statement is based on, right? So I'm going from right to left.
Peter van Driel: You see that sharp increase in shipping activity in Strait of Hormuz. On the left, you see the sales gas, and that's a key driver, right? It shows the resilience of the domestic market. As I said before, the increase in sales volumes, and the summer is always, of course, helping us, is also occurring in an environment where the margins are quite attractive. Higher sales leads to more and better pricing to the power sector, because the pricing is not just one size fits all. The more that is consumed above the base loads, higher price tiers start to kick in. So it's a double whammy. It is more volume in a higher tier of the pricing that is set for the power sector.
Peter van Driel: On top of that, you have the benefit in your margins of the gas-to-electrons, a system where we team up with the power sector. The gas that we provide is converted into electricity and transported through the grid. In the Gulf, it is a tender, so we are never sure what happens forward-looking, but it starts to more and more become a recurring revenue stream, albeit with a certain amount of uncertainty. Hope that answers the question.
Operator: Our next question is a dial-in question. You are now live. Feel free to introduce yourself, and please go ahead with your question.
Lydia Rainforth: Hello, and good afternoon. It is Lydia Rainforth from Barclays here. Firstly, congratulations on what is an incredible set of results for the quarter and for the year. Two questions, if I could. One, Fatema, just to build on the AI side that you talked about, and those were really interesting examples that you gave. I am conscious of the Sam Altman announcement that OpenAI frontier model. In terms of what AI can do today and what you think it can do, how much change do you think we can see as we go through the next 2, 3 years? I know that is a big picture question, but I think the ability that you have shown us to be able to deploy AI has been really impressive so far.
Lydia Rainforth: The second one, I think it probably links a little bit back to, whether it is for Fujairah or not, but in terms of underlying demand side of the cost, a little bit higher, are you seeing any pushback in terms of demand on some of the pricing that we are now talking about from the LNG side? Thanks.
Fatema Mohamed Al Nuaimi: Okay. On AI, when we say AI for LNG and LNG for AI, I think ADNOC Gas's business translates this better than any other business. We had the OpenAI CEO on a stage, and his main challenge was one word, which is access to LNG. Making LNG available is one of the key enablers for AI to really reach its potential. The UAE investing heavily on AI partnership and AI infrastructure, establishing Abu Dhabi and UAE as a hub for AI growth. The billions of dollars that myself and Peter mentioned being injected and increasing in capacity positions ADNOC Gas very well to serve this demand center, not just in Abu Dhabi, but also internationally through the LNG supply.
Fatema Mohamed Al Nuaimi: On the other side, which is AI for LNG, we are also applying AI, as I have mentioned, in our operations today to be more efficient, to deliver our business safely and more efficiently. In application today, we have cases where we have control rooms being managed by AI-enabled automated rooms, at least for Bu Hasa and Taweelah. One more maybe relevant and tangible example I can refer to is the Habshan restoration work, which was brought forward mainly through using AI clubbed with robotics, which enabled us to cover bigger area of our facilities for inspection and making decisions really faster. This is something that we are living day in and day out. As management, and I think everybody in this industry in the world is also working out how do we take this from initiatives and projects into an integral part of how we operate.
Fatema Mohamed Al Nuaimi: This is something that we are working on internally, including how do we govern the decision around the AI-imposed decisions, how do we shift our culture and our people and make them AI-ready for this organization to be really titled AI-native organization. Your other question, I believe, was about prices of, or the current pressure on LNG and the prices. In the short term, I think, as we go towards, I am not going to speculate prices. This is a disclaimer I have to make.
Fatema Mohamed Al Nuaimi: But I think it is obvious that with the tightness that we have in the market today, and in the very short term, the prices are going to be a function of weather, of temperature, because we have already Europe that is lower in inventory, and we have demand will increase, and the pressure on the available supply would be a function of how much is required for the heating requirements. On the longer term, we can see that there are many projects that are subject to taking FID or, in fact, starting operating, and there is a forecast of a surplus coming into the market. How are we preparing for this? I would say two things. One, we have already prepared for this by committing most of the Ruwais LNG volume, so 90% of the volume already committed.
Fatema Mohamed Al Nuaimi: Second, we see the oversupply or this cycle of the market is the real market makers. This is how demand is created. Demand gets created at that period where prices are normalized and where more consumers join the LNG market. If you are in the competitive side of the cost curve, if you have the proximity to the demand centers, and if you have contracts that are serving you for the long term, then you are in a better position to deal with the market of a surplus.
Operator: Our next question is a dial-in question. You are now live. Feel free to introduce yourself, and please go ahead with your question.
Alex Comer: Yeah. Hi, it's Alex Comer from J.P. Morgan here. Just one question for me. You've got this big CapEx expansion. I suspect looking at end demand, particularly with the LNG project that's been proposed for Ruwais, that the Bab Gas Cap project will go forward, so that's probably another $7 billion or whatever. So that's $35 billion of investment, and you've said you're going to make kind of mid-teen returns on that. And you've had this lifting the EBITDA targets, and yet your share price hasn't moved really in 3 years. So the market kind of almost doesn't believe that you're going to get the returns that you're claiming on these projects. So I'm just wondering why you think that is and what you intend to do about it. Thanks.
Peter van Driel: Well, let me start by disagreeing with you. That's maybe not the best start we can have. But if I look at what happened during the course of this year, right? If you look at sort of Jan, Feb, our share price was at 376, all-time high. Then you saw that the rumors, the news about the conflict in the Middle East started to get media attention. That was the very moment when you saw ADNOC Gas, which is a very liquid stock, on the ADX getting negatively impacted. And after that news flow started, you saw the share price declining from the high of 376, which was a 52-week high, to about 340. And that is where we are today. In the meantime, of course, the yield is supplemented with the dividend that we have rewarded our investors with.
Peter van Driel: Now, to balance my answer, I don't want to fully disagree with you. I believe that the fundamentals that we have shown today and will show going forwards are not necessarily reflected in the share price. And I think if I look at the total of all the analysts, the target price, there is definitely run room for the share price. So, I think the 52-week high early this year for me is a proof point that the share price has the upside potential. I look at the target price, and I believe that is the direction of travel. At the same time, the stock is extremely liquid.
Peter van Driel: And what we saw, and I mentioned that to you, right, that when the rumors start, there were certain funds that started to de-risk, and that covered the whole region, but in particular, the ones that are more liquid, of course, are in that sense the stocks that the investors like to have in the portfolio because the liquidity is not there. Now, there are two sides, obviously, it can go down and it can go up. But that is my view on the share price, right? So, room for improvement, but at the same time, the 376 at the beginning of this year also gave me confidence that we were on the right track. And the question now is, how can we get back to these levels and exceed it? And do not forget, we should take into account the dividend returns that we provide.
Operator: Our next question is a dial-in question. You are now live. Feel free to introduce yourself, and please go ahead with your question.
Sophia Wada: Hello. Thanks for taking my questions. It is Sophia Wada from Morgan Stanley. Actually, I have two questions. The first is, if the geopolitical situations remain as is, can we take Q4 recovery as a good proxy for 2027? And the second one is, do you have any view on the timing for FID for Bab Gas Cap? Thank you.
Peter van Driel: All right, thanks for the questions. Let me start with the last one. FID on Bab Gas Cap. I think that we, as management, need to do a really, really thorough job on evaluating these opportunities. If you do not have it right at the beginning, make the wrong decision, you will not be able to make up for that at a later stage. Given the focus we have on the execution of our projects, I think Bab Gas Cap, the FID timing is not our priority. What is important is that we assure ourselves that we get the right volumes from our supplier, upstream ADNOC, and the right composition, right? It is not just about volume, it is also about the composition. Then you will get into the tendering, where, of course, we need to time the market.
Peter van Driel: Demand is, and this I said before, may sound strange, is probably we should evidence that it's available, but that's not so much our concerns given the growth we see. Bab Gas Cap is very condensate heavy, by the way. I do not want to be rushed. I know originally on one of the earlier sessions, we said 2026. Could well be late 2026 or Q1 2027, but allow us to make the right decision and not be pressured for time on this one. Then 2027 outlook we offer, because you see that the rebound's taking place. We start guiding for the $4 billion plus for the full year, and we are currently assessing the 2027 situation.
Peter van Driel: The big upside, I believe, is that when in the middle of the year, Habshan is fully back, I think that really gives us the right opportunity to further increase our sales volumes, both domestically and internationally. We will come back, of course, and support the full year outlook. I think the Habshan restoration and the good progress we've made so far will be quite a key driver for whatever range or number we will provide you with. I'm encouraged by the rebound for the three factors that we listed to you, steel for shipping and domestic sales. That will continue, I think, with respect to those three factors to be assessed. Yes, a certain amount of uncertainty will remain, but that should not stop us from guiding you also in the year 2027.
Peter van Driel: Bear with us until Q4, and then, as I said, we will have more clarity also on Habshan, a key value driver for the performance of the company in the year 2027.
Operator: Our next question is a dial-in question. You are now live. Feel free to introduce yourself, and please go ahead with your question.
Faisal Al Azmeh: Yes, hi. This is Faisal Al Azmeh from Goldman Sachs. Just two questions on my end. The first is just maybe a follow-up on the tax situation and the tax breaks. Maybe if you can update us generally in terms of the discussions you are having with the government, given the higher CapEx profile that you are undertaking over the next couple of years. Any update there? My second question just relates to Q4, and apologies if this question was asked, but it seems like you are guiding for a bit of a weaker Q4 versus Q3, despite where prices are. Should we be a bit more cautious, or you are generally being a bit conservative, and there is upside risk to that guidance? Thank you.
Peter van Driel: All right, Faisal, thanks for the question. I think on the tax, there is no update. It is a straightforward answer, right? We do not want to vote. It is about timing. That was not part of the new question. It is still probably a case we would be making, but so far there is no news. On Q4, I do not think we are necessarily conservative, right? Let us go back to Q3. We gave a range of $600 to 800 million. We exceeded that, but when we make an estimate, what we do, we use the current situation forward-looking. I was happy to see that the amount of vessels passing the Strait of Hormuz was a lot more than what we embedded in the $600 to 800 million.
Peter van Driel: The sulfur, I always said I wanted to keep that up my sleeve to make sure that we time the sale of the sulfur at the right moment, and with the $1,000 that we locked in now, I believe that was definitely the right moment. From the basics of, let us say, the high end of the range of the 800, we are there. You get your gas-to-electrons, you get your sulfur, and then you have got the outperformance. That is what I mean. I am not sure we are necessarily conservative. I do not intend to be conservative. It does not serve anybody. But if I now look at Q4, I would say, if you look at the more than $4 billion statement for the full year, look, if we have more vessels, we do more gas-to-electrons, you will see that we will exceed it.
Peter van Driel: Do note that in Q4, the domestic sales are always somewhat lower, right, after the peak in Q3 due to the seasonality. Glass half full, half empty? Well, let us go for half full in this environment.
Operator: Our next question is a dial-in question. You are now live. Feel free to introduce yourself, and please go ahead with your question.
Ildar Khaziev: Hello, this is Ildar Khaziev from HSBC. I have a few questions. First, on the potential funding of your CapEx program going forward, so RGD, potentially Bab Gas Cap, probably raise capital requirements going forward. I have seen that some of the funding gaps you have closed through debt from the parent company, which was almost interest-free. Do you expect this to continue? I mean, are you going to maybe raise debt in the public market? So what is the expectation there? That is my first question. Secondly, I am seeing that the re-injection gas sales seem to be still lower year-on-year in Q3. Is it looking any better in Q4 so far? So that is my second question. Then finally, could you please update us on the MERAM project, please? Thank you.
Peter van Driel: I missed the third one, but I will come back. Let me talk about debt first. We always said that the balance sheet is not used, and it was done on purpose, right? It is the strength of the company. The financial framework is extremely strong. Now, I want to use the balance sheet. I think it is the right thing to do. We will have probably late 2026 or early 2027, first time that we use the $4 billion credit facility that is in place today. So that is just pushing a button, and funds will be transferred. That is earmarked for growth CapEx. For completeness, we have a $2 billion facility that we have been using all along. That is for working capital purposes. The debt will continue to increase in line with what we see in terms of the CapEx profile.
Peter van Driel: It is not one-on-one because of the cash generation of the company, obviously, but I think your question is very timely because it will start soon, as I said, either late last month of 2026 or early 2027. The rates are quite good because ADNOC Gas is borrowing money from ADNOC, and ADNOC has a very good credit rate, and we use the balance sheet of ADNOC to ensure we have got competitive rates. You spoke about, do you access the market? Well, there are no firm plans for that, but one of our joint ventures, Ruwais LNG Joint Venture, actually is financed about 80% with debt. So far, these are bank-covered loans for each of the shareholders, but Ruwais LNG, no low carbon. That is a project where I will definitely consider going out to the market. The majority of the financing today is made available by ADNOC.
Peter van Driel: On the back was their attractive and strong balance sheet. The exception is Ruwais LNG, which I think is worth assessing in a different way, given the green nature of the venture. Then the lower re-injection gas, right? Re-injection gas, just for everybody's understanding, is doing two things for us. A, when you re-inject the gas, it comes back from a reservoir, and then it is processed. It is normally better quality gas that we can sell for export purposes, so it adds value, but it also gives us the flexibility in the system. Prevailing, of course, and preference, of course, is to sell the gas to the network, to the customers. But you have seen that we have seasonal fluctuations, but also intraday fluctuations. And those fluctuations intraday will only increase over time in the UAE when you have got more solar coming into the LNG mix.
Peter van Driel: The reinjection gas is almost a consequence of what we have done with our sales gas, the priority, because it attracts a higher margin, and then it serves the purpose of quality enhancement, and it provides that buffer that we have in the system to cater for intraday swings. The last use of injection gas is also to safeguard the integrity of the system. You probably know that Qatar, under the Dolphin Energy arrangement, provides about 1.8 BCF of gas per day to the UAE, right? And ADNOC Gas provides in total 60% of that demand. Now, pipelines, as well as our own operations, require maintenance from time to time. When a Dolphin pipeline is scheduled for maintenance and it cannot deliver the gas, that is the moment we step up and use the injection gas to make up for the shortfall due to the scheduled maintenance.
Peter van Driel: And that works two ways, by the way. So it is a bit of a warm answer on the injection gas, but I think it is important to clarify what is the purpose of it. Then the third point was in MERAM. MERAM actually is progressing. I explained before that this is happening in a couple of stages. The first step, and the technical term I understand is loop zero, has been up and running. That is good news. So that is very much integrating MERAM with our existing operations. So it is the tie-ins that have been done. And that is really the starting point for the further expansion. You need to lay the foundation for your next steps, and we are pleased to see that that has occurred. We are now testing and the gas flows. The next steps are then to have those additional stages completed.
Peter van Driel: Goes hand in hand with, of course, what we see on the other end with our customer. It needs to be very well aligned. But MERAM is quite crucial, right, for ADNOC Gas. It is 3.4 MTPA, 2.2 is ethane recovery. The other 1.2, the balance is NGLs, and we all know that the NGLs are very valuable to us. So, Oya, I hope that clarifies your question. Next one, please.
Operator: Our next question is a dial-in question. You are now live. Feel free to introduce yourself, and please go ahead with your question.
Abhishek Kumar: Hi. This is Abhishek Kumar from Bank of America. I have two questions. One is on the Ruwais Diyab unconventional that was FID'd on the sidelines of ADIPEC. The question is that in your 45% volume growth guidance by 2030, how much of that is coming from this unconventional, and is ADNOC Gas going to do any additional CapEx with respect to that? What are the commercial arrangements related to this with the providers? Second is on reinjection. This quarter, the sales gas margins were pretty high and reinjections were lower. Reinjections being lower is also playing a part in having higher net profit margin for the domestic gas? Is it also linked to your Habshan being offline that is leading to lower injections because domestic gas demand is stronger? Any color on that? These are the two questions.
Fatema Mohamed Al Nuaimi: Okay. The first question is on Diyab. Of course, tapping into the unconventional is a great milestone for Abu Dhabi. We are in ADNOC Gas, the outlet through which every molecule of gas passes to the network. As you know, we have two types of gas. We have the gas that gets processed with the upstream, like the ADNOC Sour Gas and as Hail and Ghasha, which we get the products to the market. We do not carry the CapEx of this. We do not carry the processing of it, but we really take it to the market and deliver it and create additional value out of it. We have the associated and non-associated streams that comes as an incremental volume for which we invest and we prepare our facilities to accommodate them.
Fatema Mohamed Al Nuaimi: That is the Rich Gas Development Program phases and the other growth programs that we have in place. The Diyab goes to the category 1, so it is definitely a volume that will go into our customers and be available to the market, to serve the local market or international market. At the end of the day, it all goes into one mix that gets allocated to the best return and maximum value for the company. But definitely, this and earlier Umm Shaif Gas Cap FID taken in offshore, all of these upstream opportunities create only wider scope for ADNOC Gas and its customers. The second question, you answered just now, right?
Peter van Driel: Yeah, on the injection. I think we addressed that point. Don't forget, power sector has pricing, base load, and tiers. The more the swing, the higher the pricing and the gas-to-electrons. I think we addressed that one. Next one.
Operator: Our next question is a dial-in question. You are now live. Feel free to introduce yourself, and please go ahead with your question.
Ildar Khaziev: Yes, hello again. This is Ildar Khaziev from HSBC. There was also news yesterday, I think, or last week about negotiations or discussions of potential gas supply to Sharjah, to Sharjah utility providers. Can you tell us whether this is something new or this is part of your 4% to 5% midterm growth guidance for the domestic gas market? Thank you.
Fatema Mohamed Al Nuaimi: That was a good question. So, during the ADIPEC, we signed two strategic agreements, I have to say. One is with SNOC Sharjah. Sharjah is an existing customer for ADNOC Gas. It's a key customer for ADNOC Gas. And our strategic partnership or this agreement covers a frame of different elements, including incremental gas volume to them, an extension of existing agreements, and exploring also ways of utilizing the gas storage at their facilities. These are the elements that we've announced already on this collaboration. The other agreement as well is with EWEC, which is the federal company for Etihad Water and Electricity Company. EWEC is activating its power generation in Northern Emirates to satisfy the northern population and power demand. And as the main supplier of gas, we are the key enabler for these plans to materialize into reality.
Fatema Mohamed Al Nuaimi: We are exploring finalizing the agreement with them through this framework agreement that we signed during ADIPEC. One is an existing customer for an expansion of this relationship, time and volume, and one is a newly added entity into the list of customers like Sharjah. Maybe it is something that I said earlier in other calls. We are not short of the demand when it comes to the local market. The number of requests that we receive is above even the capacity that we are building for. The filtration becomes a filtration of value added and affordability as well from the market, from those consumers.
Operator: Our next question is a dial-in question. You are now live. Feel free to introduce yourself, and please go ahead with your question.
[Analyst] (Verition): Hello, this is Peter van Driel from Verition. Thank you for taking the questions and for the presentation. Maybe this was mentioned before, but I just wanted to follow up. I mean, could you comment on the trends in Q4 in terms of the passage of vessels through the Strait of Hormuz? Obviously, towards the end of Q3, we have had a bit more volumes going through, which drove the final result and this beat. I am just quite curious if the same trends are visible in Q4 and any changes there. Thank you.
Peter van Driel: Do not get me wrong. I do not want to turn this into a flippant comment, but it is very difficult to answer the question, right? You have seen what has happened in the last couple of months, and it is a start-stop, start-stop rhythm sometimes it almost looks like. Again, I do not want to make a flippant comment, but what we do, we just look at where we are today. The only piece of information I can add was that October was a good month, right? So the uncertainty remains about November, December. But do not ask me to speculate, I would say, for what is happening for the remainder of the year. And on purpose, we say the 4 billion at least, so any upside could, any upside will be reflected in that. But it remains not easy to foresee what is going to happen.
Peter van Driel: The other thing I mentioned is that in Q4, seasonality kicks in, so take that into account. We will see continued good margins, right? Our guidance is very consistent, what we always have said, right? If you look at our EBITDA margin and you compare the 33% in 2023, and I believe we are now at 37%. All of this is achieved through commercial activity. That is pushing the boundaries, making sure that we are seen as a reliable supplier, but also not forgetting on the commerciality of our proposals with new customers. Estidama is the pipeline that connects us with the northern part of the Emirates, and there is still a lot of demand out there that we are more than willing to serve. With Estidama making really good progress in completion soon, we will unlock more value in that part of the country. I am conscious of time.
Peter van Driel: I see on the screen two more questions. There was one question on working capital outflows during the Q3. We have new contracts for the Rich Gas Development 2 and 3. These are two new plants, right? A total of $8.2 billion, and it is Habshan 7 for the domestic market and 5 for the export market. Under the EPC contracts that we have, it is quite standard that the contractor receives upfront a certain advance. That was reflected in the working capital. The last question I saw was that the last steps of the restoration of Habshan, again, that will be ready by the middle of next year. So far, progress is very good. We alluded to the fact that that is also used or improved by the fact that AI is available to us, the robotics are there.
Peter van Driel: All these tools, AI for LNG that we have in our toolkit, we make use of them, and you see now that it really has an impact. Any day that your restoration is done earlier is true money that can be made. We are now in that phase where we are rebuilding. The bigger part, of course, are long lead items, bigger pieces of equipment, and they are being installed. That sounds maybe a bit simple, but that takes time, right? It is also the testing. Do not forget, it is more than just putting the kit in place. It is very much also making sure that it works properly, that people operate in a very safe environment. We take pride in our safety records. We take pride in our operational performance, right? Look at the reliability, look at the utilization numbers.
Peter van Driel: All of that just simply takes time to get the job done. I think that was it.
Operator: Thank you. As there are no further questions in the queue, I will now hand back to Richard to close the meeting.
Richard Griffith: Well, thank you. That concludes our Q&A. I would like to thank you all for joining us today. I will remind you that the presentation and our management discussion and analysis report are available on our investor relations website, indeed, along with our data book. The IR team is always available for any follow-up questions. Finally, do reach out to us if you would like to have some face time. We are on the road for the coming weeks, but if you are not scheduled to meet us, you will be more than welcome to try and arrange a meeting. Thank you very much, and have a good day.
