Arabian Drilling has signed a four-year contract worth $532.5 million, around SAR 2 billion, with Khafji Joint Operations to provide four high-specification offshore jack-up drilling rigs. The award represents the largest single offshore drilling mandate KJO has placed with the Saudi-listed company and increases the number of rigs Arabian Drilling operates under KJO contracts by 200 per cent. For a business that already runs one of the Middle East’s largest onshore and offshore drilling fleets, the deal marks a considerable step forward in its offshore ambitions.
A record offshore award
The contract covers the provision of the four jack-up rigs for KJO’s offshore drilling operations across the coming four years. Arabian Drilling described the award as its largest single offshore drilling mandate from KJO to date, and the arrival of four high-specification units expands the fleet the company deploys in support of the joint venture’s production programme.
The timing matters. Oil producers across the Gulf are investing to sustain and expand output, and drilling contractors with modern jack-up capacity have been among the clearest beneficiaries of that spending. Arabian Drilling’s fleet expansion positions it squarely for the cycle ahead, with contracted work now stretching over multiple years.
The Khafji Joint Operations partnership
Khafji Joint Operations is a joint venture between Aramco Gulf Operations Company and the Kuwait Gulf Oil Company. It is responsible for oil and gas exploration, drilling and production in the offshore and onshore Divided Zone between Saudi Arabia and Kuwait, an area formerly known as the Neutral Zone. Its remit covers four main offshore fields: Khafji, Hout, Lulu and Dorra.
Sustaining production from mature offshore fields requires steady, technically demanding drilling work. The decision to bring in four additional high-specification jack-up rigs signals a multi-year commitment to maintaining and growing output from the concession, and it gives Arabian Drilling a central role in that effort.
A growing order book
The new contract raises Arabian Drilling’s total backlog to approximately $4.8 billion, or about SAR 18 billion. It follows contracts signed in recent months with SLB for nineteen land rigs under the Gas LSTK programme, which added roughly $1.3 billion, around SAR 5 billion, to the backlog, according to filings on the Saudi Exchange.
Founded in 1964 and majority owned by Industrialization and Energy Services Company, known as TAQA, and SLB, Arabian Drilling counts Saudi Aramco, Baker Hughes and SLB among its key clients. The company’s market capitalisation stands at around $2.2 billion, roughly SAR 8.43 billion, based on data published on the Saudi Exchange’s website.
What the deal means for the Gulf’s drilling sector
The award is one of the strongest signals available in the regional drilling market: a multi-year, multi-rig commitment from a joint venture whose shareholders sit among the world’s most important oil producers. Contractors able to field high-specification equipment are winning the longest contracts, and the speed at which Arabian Drilling’s backlog has grown illustrates how quickly order books are building across the sector.
For the Saudi drilling champion itself, the deal deepens its offshore presence at a moment when the kingdom is pushing to expand oil and gas capacity. With a backlog approaching $5 billion, Arabian Drilling heads into the coming years with work already secured and a fleet large enough to serve several major clients at once, from onshore gas drilling to the offshore jack-up market this contract reinforces.
Source: forbesmiddleeast.com