Why is Saipem exiting the shallow-water drilling market in Saudi Arabia?

Saipem is exiting this segment to streamline its portfolio and focus on high-margin, technologically demanding deepwater and harsh-environment offshore drilling. Shallow-water jack-up drilling has become highly commoditized with lower profit margins, whereas deepwater assets are currently experiencing a global supply squeeze and record-high dayrates.

Who are the primary beneficiaries of this asset sale?

The primary beneficiaries are regional Middle Eastern drilling contractors who specialize in jack-up operations and seek to expand their footprint with Saudi Aramco. Additionally, Saipem's shareholders benefit from a more focused corporate strategy, a stronger balance sheet, and reduced capital expenditure requirements for low-yield assets.

How does this divestment affect Saipem's long-term financial strategy?

The divestment is a key step in Saipem's deleveraging strategy, providing immediate liquidity to reduce net debt and improve liquidity ratios. It allows the company to reallocate capital toward high-tech offshore vessels and energy transition projects, which offer superior long-term returns on investment.

Rigzone · June 24, 2026 (Jun 24) · 1 min read

Saipem Divests Saudi Shallow Water Rigs

Analysis

AI-assisted analysis · reviewed by Yuri Kan

Italian oilfield services giant Saipem has finalized the divestment of its shallow-water jack-up drilling fleet in Saudi Arabia, marking a decisive shift in its global capital allocation strategy. By offloading these mature, lower-margin assets, the company is actively pivoting toward high-value deepwater and harsh-environment offshore drilling markets. This strategic realignment allows Saipem to deleverage its balance sheet and concentrate its engineering expertise on complex, high-barrier-to-entry offshore frontiers.

Key Facts

Saipem has officially completed the divestment of its shallow-water jack-up drilling rig portfolio operating in Saudi Arabia.
The transaction aligns with Saipem's broader industrial plan to optimize its asset portfolio and reduce exposure to highly commoditized shallow-water segments.
The divestment target specifically involves jack-up rigs that have historically serviced Saudi Aramco's shallow-water fields in the Persian Gulf.
Proceeds from the sale will be utilized to strengthen Saipem's financial position and fund capital expenditure for deepwater vessel upgrades.
The transaction allows Saipem to focus its offshore drilling division on ultra-deepwater drillships and semi-submersible rigs, where dayrates and margins are currently surging.

Background & Context

Over the past decade, the offshore drilling market has bifurcated into highly competitive, low-margin shallow-water jack-up operations and capital-intensive, high-margin deepwater projects. Saipem, which has historically maintained a diversified fleet, faced intense competition in the Middle East jack-up market from localized drilling contractors and aggressive jack-up specialists. Following a major financial restructuring in recent years, the Italian contractor has committed to a capital-light strategy in commoditized sectors while doubling down on its core competencies in deepwater engineering, procurement, construction, and installation (EPCI).

Market Impact

This divestment significantly reduces Saipem's operational footprint in the Middle Eastern shallow-water sector, freeing up crew and management resources to focus on high-yield regions like West Africa, Brazil, and the Mediterranean. For the buyers, acquiring active rigs with existing Saudi Aramco contracts provides immediate, stable cash flow in a region with the world's lowest extraction costs. For the broader oilfield services sector, this move underscores a growing trend of European majors high-grading their portfolios and leaving the shallow-water space to specialized regional players.

What to Watch

Going forward, the market should watch for Saipem's redeployment of this capital into its ultra-deepwater fleet, particularly potential upgrades for its flagship drillships like the Santorini and Saipem 12000. Investors will also monitor Saipem's upcoming quarterly earnings to assess the transaction's direct impact on net debt reduction and operating margins. Additionally, expect Saipem to bid aggressively on upcoming deepwater exploration campaigns in emerging offshore frontiers.

Why This Matters for Cyprus

While this specific transaction focuses on Saudi Arabia, Saipem's strategic pivot to deepwater directly benefits the East Mediterranean, where the company is a dominant player. Saipem has been heavily involved in major regional deepwater projects, including Egypt's Zohr and Cyprus's Calypso discoveries. By freeing up capital and focusing exclusively on deepwater assets, Saipem enhances its capacity to deploy high-spec drillships and offshore construction vessels to upcoming drilling campaigns in the exclusive economic zones of Cyprus, Israel, and Egypt.

Frequently Asked Questions

Why is Saipem exiting the shallow-water drilling market in Saudi Arabia?: Saipem is exiting this segment to streamline its portfolio and focus on high-margin, technologically demanding deepwater and harsh-environment offshore drilling. Shallow-water jack-up drilling has become highly commoditized with lower profit margins, whereas deepwater assets are currently experiencing a global supply squeeze and record-high dayrates.
Who are the primary beneficiaries of this asset sale?: The primary beneficiaries are regional Middle Eastern drilling contractors who specialize in jack-up operations and seek to expand their footprint with Saudi Aramco. Additionally, Saipem's shareholders benefit from a more focused corporate strategy, a stronger balance sheet, and reduced capital expenditure requirements for low-yield assets.
How does this divestment affect Saipem's long-term financial strategy?: The divestment is a key step in Saipem's deleveraging strategy, providing immediate liquidity to reduce net debt and improve liquidity ratios. It allows the company to reallocate capital toward high-tech offshore vessels and energy transition projects, which offer superior long-term returns on investment.

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