Helmerich and Payne finalizes big Saudi Arabia rig deal

Helmerich & Payne Rigs Ready for Super Spec - Barron's


Helmerich & Payne in Tulsa reached a deal this week to provide 7 new rigs to Saudi Aramco.

Terms of the contract were finalized as the seven super-spec rigs were awarded 5-year contracts with 1-year options. The rigs are expected to be put into immediate use once they are delivered and that should be in the fourth calendar quarter of this year.

Similar to the one-rig award with Saudi Aramco in August 2023, these rigs will be sourced from H&P’s idle super-spec FlexRigs® in the U.S. and, during fiscal 2024, the company plans to convert the rigs to walking configurations and further equip them to suit Saudi Aramco’s unconventional gas drilling rig specifications.

The bulk of capex required to prepare these rigs for this award was included as part of Helmerich & Payne’s fiscal 2024 capex budget with the remainder to be spent early in fiscal 2025. In total, expectations are for capital expenditures related to these rigs to be approximately $175 to $196 million, of which $30 to $35 million is expected to be spent in fiscal 2025. Additionally, the company expects this contract award to contribute more than $25 million to its International Solutions segment direct margin(1) on an annualized basis.

multiple drilling rigs

“With the additional capital invested, we believe these highly-mobile, pad-capable super-spec rigs will be some of the most capable rigs in the world to be used for unconventional drilling,” stated President and CEO John Lindsay.

“After these initial investments, we expect to create a diversified revenue source that is able to generate a stable source of cash flows with a relatively low level of additional annual maintenance capex.”