Saudi Drilling Companies Expand in Gas and Abroad After Oil Expansion Freeze

SadaNews - After nearly two years of slowed activity following Saudi Aramco's abandonment of plans to raise its production capacity from 12 to 13 million barrels per day, the Saudi drilling sector is beginning to outline a new phase of growth driven by external expansion, improved operational efficiency, and a focus on gas.

The number of active oil drilling rigs in Saudi Arabia fell to only 20 rigs in July 2025, the lowest level in over two decades, down from 46 rigs at the beginning of 2024, according to "Baker Hughes" data reported by "Bloomberg".

This decline reflects Aramco's shift in priorities towards developing natural gas projects and reducing spending on traditional oil drilling, which has pressured local drilling contractors and pushed them to accelerate their expansion plans in foreign markets.

"Arab Drilling" Records First Loss Since Listing and Prepares for Recovery

As a result of the operational pressures following cuts in domestic spending on crude drilling, "Arab Drilling" incurred its first quarterly loss since its listing on the Saudi market in November 2022, amounting to 9.4 million riyals in the third quarter of 2025. The company aims for recovery indicators to emerge next year through increased operating rates and expansion in foreign markets.

Ghasan Mardad, the CEO of the company, expects the operating rate of "Arab Drilling" rigs to rise to 80% at the beginning of the second quarter of 2026, compared to 73% currently, while offshore rigs are expected to reach full operation at 100% instead of the current 67%. Mardad sees this step as capable of improving profit margins since offshore rigs are less costly and more profitable than their onshore counterparts.

He added in an interview with "Asharq" that the company has entered the unconventional gas rig market, which has added about 600 million riyals to revenues, in line with Aramco's expansion in gas projects.

Suspension of Half of the Rigs Costs "Arab Drilling" a Quarterly Loss

A report from "Aramco" for the year 2024 indicated that it awarded contracts worth $25 billion, including the development of unconventional gas operations in the Al-Jafurah field, the expansion of the main gas network, and the establishment of new drilling platforms for gas production.

In this context, Ziad Al-Murshid, Executive Vice President and Chief Financial Officer at "Aramco," stated in an interview with "Asharq" that the company raised its growth target for gas sales capacity from over 60% to about 80%, indicating that production increases will begin soon with the operation of the Al-Jafurah field and the Ras Tanajib plant during the fourth quarter of 2025.

Turning Toward Syria

With this anticipated growth, "Aramco" expects an increase of more than one million barrels per day of high-value associated liquids, resulting in a total gas and associated liquids production of about 6 million barrels of oil equivalent per day by 2030.

The head of "Arab Drilling" told "Asharq" that the number of suspended platforms by "Aramco" has dropped after the restart of five platforms, in addition to the operation of another platform in one of the Gulf countries, which represents the company’s first activity outside Saudi Arabia, enhancing revenue flows in the upcoming phase.

He also revealed the signing of a memorandum of understanding with the Syrian Ministry of Energy to cooperate in the fields of petroleum field services, drilling and maintenance of wells, technical training, and human resources development.

"Arab Drilling" was listed on the Saudi financial market on November 7, 2022, with a market value of 8.9 billion riyals at the time of listing after its shares were offered at a price of 100 riyals per share, raising 2.67 billion riyals through the IPO.

The current market value of the company is around 8.12 billion riyals, while its share is trading at 91.2 riyals, which is below the initial offering price.

"Addis Holding".. External Expansion Compensates for Local Market Slowdown

The peer company in the Saudi drilling market, Addis Holding, has maintained a steady profit trajectory for more than a year, with its quarterly profits hovering around 200 million riyals since the second quarter of 2024, before surpassing this threshold in the third quarter of 2025 to reach 219.1 million riyals.

Mohammed Farouk, the CEO of the company, noted in an interview with "Asharq" that half of "Addis"’s operations are within Saudi Arabia, while the other half is distributed between the Gulf (25%) and countries in Asia and Africa (25%).

Detailed financial statements from the company showed that its operations in Saudi Arabia accounted for about 72% of total revenues in the first quarter of 2024, gradually declining to 57% in the third quarter of 2025, while the contribution from foreign markets has increased due to the company entering new markets such as Nigeria and Southeast Asia.

Farouk expects to achieve revenue and operating profit growth between 35% and 40% during 2026, driven by the operation of new rigs and planned acquisition deals outside the Kingdom. He added that external expansion has helped reduce costs and raise daily rental prices, with some markets having a collection cycle of no more than 45 days after issuing the invoice, which enhances operating cash flows.

The Public Investment Fund owns a 23.8% stake in "Addis," which currently has a market value of about 18.9 billion riyals, compared to its IPO valuation of 15.2 billion riyals when it was listed in October 2023.

With the suspension of new oil well drilling in the Kingdom, directing rig focus towards gas, and the rise of unconventional investment in the energy sector, it seems that the Saudi drilling industry is entering a phase of repositioning, imposing a new equation between reliance on the domestic oil and gas market and striving to diversify income sources through expansion into more regional and global energy markets.