A number of international offshore drilling contractors with an exposure to Saudi Arabia have seen their share prices drop after the Middle East energy giant announced a paused in its oil production capacity expansion plans.
Saudi Arabia’s offshore sector is a shallow-water play, which means that jack-up drilling rigs are deployed in the country.
Norway-listed jack-up drillers Borr Drilling and Shelf Drilling have seen their stock prices sink on Tuesday by 8.8% and 10.4%, respectively.
Borr has a fleet of three jack-ups contracted to Saudi Aramco, while Shelf has nine, according to rig market analyst Clarksons.
New York-listed driller Valaris has also seen a small drop in its share price in early trading, down 0.3%.
Valaris has exposure to Saudi Arabia through the eight jack-ups that are contracted to the country.
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Other drillers with an exposure to Saudi Arabia’s offshore play include Ades, SinoOcean, Arabian Drilling, China Merchants, China National Offshore Corporation and Aro Drilling, according to Clarksons.
The onshore arena in Saudi Arabia hosts a very large number of drilling rigs. International companies with a Saudi exposure include Nabors with 51 rigs in Saudi and Saipem with 28, and both contractors were trading slightly higher.
On Tuesday, Aramco — the world’s largest oil exporter — was instructed by the Saudi government to pause the further expansion of its oil production capacity.
It will maintain its maximum sustainable capacity at 12 million barrels per day and pause on the increase to 13 million bpd.