Helmerich & Payne, Inc. Signs Deal with Saudi Aramco for Cutting-Edge Drilling Rigs
Helmerich & Payne, Inc. has inked a deal with Saudi Aramco to provide seven cutting-edge drilling rigs, set to kick off operations in the fourth quarter of 2024. The high-performance rigs are part of Helmerich & Payne’s fleet of idle super-spec FlexRigs in the U.S., and will undergo modifications to suit Saudi Aramco’s unconventional gas drilling operations.
With a five-year contract and an option to extend for an additional year, these rigs are expected to contribute over $25 million annually to Helmerich & Payne’s direct margin in the International Solutions segment.
The drilling contractor has allocated a significant portion of its fiscal 2024 capital expenditure budget to this project, with further spending anticipated in early fiscal 2025. The company estimates that the total capital expenditures for readying these rigs will range from $175 to $196 million.
John Lindsay, President and CEO of Helmerich & Payne, views the partnership with Saudi Aramco as a strategic move to support the success of their unconventional gas drilling campaign. Lindsay anticipates that this investment will not only establish a stable source of cash flow but also require minimal annual maintenance capital expenditures post-investment.
Helmerich & Payne, founded in 1920, has gained recognition for its unmatched commitment to drilling productivity and reliability. Operating a fleet of top-notch drilling rigs and actively developing advanced drilling technologies, the company has solidified its position as a leader in the industry.
Analyst comment
Positive news. The deal with Saudi Aramco to provide drilling rigs is expected to contribute over $25 million annually to Helmerich & Payne’s direct margin. The company has allocated a significant portion of its 2024 capital expenditure budget to this project, with further spending anticipated in 2025. The partnership is seen as a strategic move to support success in unconventional gas drilling, establishing a stable source of cash flow. This investment is expected to require minimal annual maintenance capital expenditures post-investment. As a result, the market outlook for Helmerich & Payne is positive in the short-term.
