Update shared on 03 Dec 2025
Analysts have marginally raised their price target for Arabian Drilling to about SAR 97.23, reflecting slightly higher long term profitability expectations and a modestly increased cost of equity embedded in their valuation models.
What's in the News
- Arabian Drilling secured four rig contract renewals with Saudi Aramco worth over SAR 2 billion, adding 30 committed rig years and lifting its backlog to a record SAR 12.2 billion by the end of 2025, with financial impact expected from the first quarter of 2026 (company announcement).
- All planned rig contract extensions for 2025 have now been finalized, including two rigs whose terms were previously set to expire in 2026, reinforcing visibility on medium term revenues (company announcement).
- The company guided that fourth quarter 2025 revenue will be broadly in line with the third quarter, but warned of potential downside of up to 5% as the full effect of temporary rig suspensions is felt (earnings guidance).
- A special shareholders meeting scheduled for October 22, 2025 in Khobar will vote on ending the current Board term early, electing a new Board for 2025 to 2029, transferring SAR 267 million of statutory reserves to retained earnings, and suspending dividend distribution for 2025 (shareholder meeting notice).
- A Board meeting on September 27, 2025 will consider early termination of the current Board term and confirming the new Board to start on November 2, 2025 for a four year mandate ending November 1, 2029 (Board meeting agenda).
Valuation Changes
- Consensus Analyst Price Target: Fair value estimate is unchanged at about SAR 97.23, indicating stable long term valuation expectations.
- Discount Rate: Risen slightly from 19.87 percent to 19.93 percent, reflecting a modest increase in the perceived cost of equity.
- Revenue Growth: Marginally lower, edging down from 6.24 percent to 6.24 percent, implying practically unchanged long term top line growth assumptions.
- Net Profit Margin: Increased very slightly from 10.94 percent to 10.94 percent, signaling a negligible uplift in expected profitability.
- Future P/E: Ticked up marginally from 32.86x to 32.91x, consistent with a stable but slightly more optimistic earnings multiple outlook.
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