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Middle East Oil Gives U.S. Drillers an Opportunity for Growth


These translations are done via Google Translate

Helmerich & Payne’s planned takeover may be a sign of things to come.

Saudi Arabia's Shaybah oil field in the Rub' Al-Khali desert.
Saudi Arabia’s Shaybah oil field in the Rub’ Al-Khali desert.

US shale drilling activity appears to have peaked.

The number of operating onshore oil rigs is the lowest since 2021, a result of industry consolidation and tighter spending as companies return more profits to shareholders.

That presents a challenge for the country’s oil-field contractors.

Activity is increasingly focused on the Permian Basin of Texas and New Mexico, the world’s largest shale patch. But even there, the rig count has fallen this year, remaining far off its pre-pandemic high.

In order to grow, some of those firms are starting to look abroad. Last week, rig supplier Helmerich & Payne Inc. announced a $1.97 billion deal to buy closely held KCA Deutag International Ltd., a UK driller with significant operations in the Middle East.

While H&P isn’t a name that resonates overseas — unlike top oil-services providers SLB, Halliburton Co. and Baker Hughes — an acquisition of that size represents a massive bet for a $4 billion player.

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With mounting tech-driven efficiencies and stricter capital discipline among oil and gas producers, H&P “realized the market in the US was evolving,” with growth opportunities “more measured,” Chief Executive Officer John Lindsay said on a call to discuss the purchase.

Bloomberg Intelligence forecasts an increase of just 2% in the deployment of US land rigs for the rest of this year. The Middle East market is expected to grow 9% a year through 2026, Lindsay said.

SLB and Halliburton have also flagged strong international demand for crude drilling — particularly in countries such as Saudi Arabia — and are betting growth there may help offset weakness at home.

“If you want to be big in the US, you have to be in the Permian,” Lindsay said. “And if you want to be big globally, you have to be in the Middle East.”

–David Wethe, Bloomberg New



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