Arabian Drilling Shares Climb on 2 Billion Riyal Gas Rig Contract

Shares of Arabian Drilling Co. rallied on the Saudi Exchange Monday after the country's largest drilling contractor announced it secured a major long-term contract for its land rig operations.

Contract Details

Arabian Drilling disclosed it has signed a five-year, fixed-price contract for eight land rigs designated for gas lump-sum turnkey (LSTK) operations, according to a company announcement. The deal underscores sustained demand for energy exploration and production services in the region.

This type of long-term, fixed-price agreement is significant for investors as it provides a clear and predictable stream of future revenue, reducing uncertainty related to fluctuating market prices.

Financial Impact

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The agreement is projected to add approximately 2 billion riyals (about $532.5 million) to Arabian Drilling's order backlog. This new business increases the company's total backlog to around 16 billion riyals.

Revenue from the contract is expected to begin contributing to the company's financial results in the third quarter. The substantial addition to the backlog reinforces the company's financial health and its outlook for sustained operational activity.

Market Reaction

Following the news, Arabian Drilling's shares rose by as much as 3.5% during Monday's trading session. The stock ultimately closed at 95.6 riyals, marking a gain of 2.2% for the day, as investors reacted positively to the strengthened revenue pipeline.