A bold shift is underway in the Saudi drilling industry, and it's time to uncover the story behind this transformation.
Following a period of slowed activity, Saudi Aramco's decision to freeze its oil production capacity expansion has sparked a new era of growth for drilling companies. With a focus on natural gas and improved efficiency, these companies are expanding their horizons, both domestically and internationally.
The number of active oil rigs in Saudi Arabia hit a two-decade low in July 2025, with only 20 rigs operating, down from 46 at the start of 2024. This decline reflects Aramco's strategic move towards natural gas projects and reduced spending on traditional oil drilling. Local contractors, faced with these challenges, have accelerated their expansion plans abroad.
Arab Drilling's Loss and Recovery Journey
Arab Drilling, a prominent player in this sector, experienced its first quarterly loss since listing on the Saudi market in November 2022. The loss, amounting to 9.4 million riyals in Q3 2025, was a result of reduced domestic spending on crude drilling. However, the company is optimistic about its recovery, aiming to increase operating rates and expand into foreign markets.
Ghasan Mardad, the CEO, expects the operating rate of Arab Drilling's rigs to rise to 80% by Q2 2026, with offshore rigs reaching full operation at 100%. Mardad believes this shift will improve profit margins, as offshore rigs are more cost-effective and profitable.
Additionally, Arab Drilling has entered the unconventional gas rig market, adding approximately 600 million riyals to its revenues, in line with Aramco's gas project expansion.
The Impact of Rig Suspension
Aramco's report for 2024 revealed contracts worth $25 billion, including the development of unconventional gas operations in the Al-Jafurah field and the expansion of the main gas network. Ziad Al-Murshid, Executive Vice President and CFO at Aramco, stated that the company has raised its growth target for gas sales capacity from over 60% to approximately 80%. Production increases are expected soon with the operation of the Al-Jafurah field and the Ras Tanajib plant in Q4 2025.
Turning Towards New Horizons
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.
Arab Drilling's head revealed that the number of suspended platforms has decreased after the restart of five platforms and the operation of another platform in a Gulf country, marking the company's first activity outside Saudi Arabia. This expansion is expected to enhance revenue flows.
Furthermore, Arab Drilling has signed a memorandum of understanding with the Syrian Ministry of Energy, cooperating in petroleum field services, drilling, well maintenance, technical training, and human resources development.
Addis Holding: A Story of Resilience
Addis Holding, a peer company in the Saudi drilling market, has demonstrated resilience, maintaining steady profits for over a year. Its quarterly profits have consistently hovered around 200 million riyals since Q2 2024, surpassing this threshold in Q3 2025 to reach 219.1 million riyals.
Mohammed Farouk, the CEO, highlighted that half of Addis's operations are within Saudi Arabia, while the other half is distributed between the Gulf and countries in Asia and Africa. The company's financial statements show a gradual decline in revenue contribution from Saudi Arabia, from 72% in Q1 2024 to 57% in Q3 2025, with an increase in revenue from foreign markets due to expansion into new markets like Nigeria and Southeast Asia.
Farouk expects revenue and operating profit growth between 35% and 40% during 2026, driven by new rig operations and planned acquisition deals outside the Kingdom. External expansion has helped reduce costs and increase daily rental prices, with some markets offering collection cycles of no more than 45 days after invoicing, enhancing operating cash flows.
The Public Investment Fund owns a 23.8% stake in Addis, which currently has a market value of approximately 18.9 billion riyals, up from its IPO valuation of 15.2 billion riyals in October 2023.
The Future of Saudi Drilling
With the suspension of new oil well drilling in the Kingdom, the Saudi drilling industry is undergoing a repositioning phase. The focus on gas and unconventional investments suggests a new equation, balancing reliance on the domestic oil and gas market with efforts to diversify income sources through expansion into regional and global energy markets.
This transformation raises intriguing questions: How will these companies navigate the challenges of expanding into new markets? What impact will this have on the energy sector's landscape? Join the discussion and share your thoughts on this evolving industry.
