ADNOC Gas: revenue decline eased from −33.2% to −9.7%, but EBITDA fell 42.7% as margin compressed from 42.5% to 27.0%

In its Q3 2026 report, ADNOC Gas posted revenue of USD 4,384.2 mn, down 9.7% year on year but far better than the disastrous second quarter, when the decline reached 33.2%. EBITDA fell 42.7% to USD 1,183.9 mn and the margin collapsed from 42.5% to 27.0%, while net profit was almost flat (−0.2%) at USD 1,335.7 mn with a 30.5% net margin. The company retains a net cash position of USD 1,157.0 mn and trades at P/E LTM 19.8 and EV/EBITDA LTM 12.1. Our conclusion: fairly valued – an EV/EBITDA of 12.1 leaves no cushion, and the EBITDA collapse outweighs the revenue recovery. Our view: the share is fairly valued.

Our view: is there upside

Our view in numbers

Key takeaways

— Revenue decline eased from −33.2% to −9.7% but still fell short of last year's level

— EBITDA fell 42.7% and the margin compressed from 42.5% to 27.0%

— Net profit was almost flat because the net margin rose from 27.5% to 30.5%

— Net cash position of USD 1,157.0 mn with net debt/EBITDA at −0.21

— Operating cash flow of USD 2,355.9 mn covered capital expenditure of USD 1,305.0 mn

— Valuation: P/E LTM 19.8 and EV/EBITDA LTM 12.1 – no discount to its own levels

Key figures, USD bn

Revenue decline eased from −33.2% to −9.7% but still fell short of last year's level

In Q3 2026 revenue was USD 4,384.2 mn versus USD 4,856.1 mn a year earlier. The annual decline slowed to 9.7% from 33.2% in Q2 – an acceleration versus the previous quarter, but revenue remains below last year's level.

The sequential recovery is visible: revenue was USD 3,111.4 mn in Q2 and USD 4,384.2 mn in Q3. Yet in annual terms the company is still losing ground, and the quarterly rebound does not offset the collapse earlier in the year.

Revenue dynamics matter for assessing business resilience, but the key question is profitability: with revenue down 9.7%, EBITDA fell 42.7%, meaning operating leverage worked against the company.

EBITDA fell 42.7% and the margin compressed from 42.5% to 27.0%

EBITDA for Q3 2026 was USD 1,183.9 mn, down 42.7% from USD 2,065.8 mn a year earlier. The EBITDA margin fell to 27.0% from 42.5% – a drop of 15.5 percentage points.

The margin compression on a relatively modest revenue decline points to higher costs or lower selling prices. Operating profit was USD 1,527.4 mn and exceeded EBITDA – an unusual relationship indicating that EBITDA includes negative items not captured in operating profit.

For investors this means earnings quality has deteriorated: the company earns less on each dollar of revenue, and restoring the margin to last year's levels will require either higher prices or cost cuts.

Net profit was almost flat because the net margin rose from 27.5% to 30.5%

Net profit for Q3 2026 was USD 1,335.7 mn versus USD 1,337.7 mn a year earlier – a decline of just 0.2%. The net margin rose to 30.5% from 27.5%.

Rising net margin alongside falling EBITDA means that below the operating line profit was supported by other factors – possibly lower finance costs or a tax effect. Yet net profit was almost flat, and this does not offset the weakness in operating metrics.

Over the trailing twelve months net profit was USD 3,588.2 mn. That level rests on quarters with higher EBITDA, and if margin compression persists, LTM profit will decline.

Net cash position of USD 1,157.0 mn with net debt/EBITDA at −0.21

As of 30 September 2026 the company has a net cash position of USD 1,157.0 mn – liabilities are less than cash. The net debt/EBITDA LTM ratio is −0.21, meaning there is no debt burden.

Over the quarter the net cash position decreased from USD 1,067.1 mn on 30 June to USD 1,157.0 mn on 30 September – a change of −0.1 bn. Over 12 months the position fell from USD 3,405.4 mn on 30 September 2025 to USD 1,157.0 mn – a change of +2.2 bn.

The reduction in the cash cushion is linked to capital expenditure and possibly shareholder payouts. Yet the company remains financially sound: even after the decline, cash covers liabilities.

Operating cash flow of USD 2,355.9 mn covered capital expenditure of USD 1,305.0 mn

Operating cash flow for Q3 2026 was USD 2,355.9 mn, capital expenditure – USD 1,305.0 mn. Free cash flow before shareholder distributions remains positive.

For comparison: in Q2 operating cash flow was only USD 32.2 mn with capital expenditure of USD 1,337.2 mn – the company spent more on investment than it earned. In Q3 the flow recovered, supporting the cash position.

Over the trailing twelve months operating cash flow was USD 5,058.0 mn. This is sufficient to fund capital expenditure and maintain the net cash position, although its level declined over the year.

Valuation: P/E LTM 19.8 and EV/EBITDA LTM 12.1 – no discount to its own levels

With a market capitalisation of USD 71,022.1 mn, the company trades at P/E LTM 19.8 and EV/EBITDA LTM 12.1. Return on equity is 21.5%.

The multiples do not look low for a company with falling EBITDA: an EV/EBITDA of 12.1 implies the market is already pricing in a profit recovery. If the margin stays at 27.0%, the current valuation offers no cushion.

Comparison with its own history is difficult due to the absence of average multiples for prior periods. However, the current EV/EBITDA is above the typical level for oil and gas companies, which limits upside potential.

Valuation on the latest reported figures

Bottom line

The report's strengths are the revenue recovery to USD 4,384.2 mn and positive operating cash flow of USD 2,355.9 mn, which covered capital expenditure. However, EBITDA fell 42.7%, the margin compressed to 27.0%, and net profit was flat only because the net margin rose. The company retains a net cash position of USD 1,157.0 mn, but it shrank by USD 2.2 bn over the year. At EV/EBITDA 12.1 the valuation offers no cushion, and a margin recovery is needed for the shares to rise. Our conclusion: fairly valued – an EV/EBITDA of 12.1 leaves no cushion, and the EBITDA collapse outweighs the revenue recovery. Our view: the share is fairly valued.