Italy’s engineering and construction leader, Saipem, is making significant changes to its operational strategy by divesting its stake in Saudi Arabian Saipem (SAS). This decision marks the end of Saipem’s shallow water drilling activities in Saudi waters as it transitions towards deeper water exploration. The divestiture will allow ADES Holding Company, part of the Saudi Arabian ADES Group, to acquire several of Saipem’s jack-up rigs, thereby expanding its fleet.
Strategic Shift in Operations
Saipem has executed a binding sale and purchase agreement with ADES Saudi Limited Company, which is an indirect subsidiary of ADES. This agreement outlines the sale of Saipem’s entire interest in SAS, a company involved in shallow-water drilling. Through this transaction, ADES will enhance its fleet by incorporating three owned jack-up rigs: Perro Negro 7, Perro Negro 8, and Perro Negro 10, as well as two leased rigs, Perro Negro 11 and Perro Negro 13. The deal is anticipated to finalize by the third quarter of 2026, pending regulatory approvals and customary preconditions.
Investment in Growth and Expansion
Dr. Mohamed Farouk, CEO of ADES Holding, expressed excitement over this acquisition. He highlighted that adding five high-specification premium jack-up rigs—average age of 10.4 years—will significantly bolster ADES’s asset base and enhance its financial performance. This transaction underscores ADES’s strategic agility amidst an improving regional landscape, with a noted increase in offshore drilling visibility due to returning suspended rigs in the Gulf Cooperation Council (GCC) region.
This acquisition not only strengthens ADES’s foothold in Saudi Arabia but also marks its entry into the Mexican market, setting the stage for future expansion opportunities. The broader rig fleet presents advantages in terms of operational efficiencies encompassing logistics, maintenance, and procurement. This is anticipated to yield long-term value for the company and its investors.
Financial Impact and Future Prospects
In 2025, SAS reported revenues of approximately 636 million Saudi riyals, or $170 million. The divestment is valued at $285 million on a debt-free/cash-free basis, with payment due at closing. The funds generated from this sale will align with Saipem’s broader industrial strategy aimed at focusing on high-value deepwater and harsh-environment offshore drilling operations.
Once the sale is completed, both companies will enter a bareboat charter agreement, enabling Saipem to continue operations in Mexico using the Perro Negro 10 rig while fulfilling existing commitments. This move represents another step in Saipem’s ongoing strategy to concentrate its resources on more complex and lucrative segments of the offshore drilling market.
In its current capacity, ADES manages a robust offshore jack-up fleet that includes 81 units, with 46 categorized as premium. After concluding this acquisition, ADES’s fleet will grow to 88 offshore units, enhancing its competitive position in the market.
In summarizing its outlook, ADES noted that it stands poised to meet sustained customer demand, driven not only by a premium fleet but also a strong backlog of long-term projects. Improved regional conditions, coming along with the return of previously suspended rigs, are expected to fortify market dynamics and support positive growth in the offshore drilling sector. As Saipem moves forward with new contracts, including projects in Angola, its strategic realignment promises an exciting future for both companies involved in this significant transaction.