Baker Hughes Surges on Major Aramco Gas Expansion Contract
Energy services giant to more than double its specialized drilling fleet in Saudi Arabia, deepening its strategic partnership with the state oil company.
Baker Hughes Co. (NASDAQ: BKR) shares climbed Friday after the energy technology company announced a significant multi-year contract with Aramco to expand its gas development operations in Saudi Arabia, reinforcing a critical strategic alliance in the Middle East.
The Houston-based firm will more than double its fleet of underbalanced coiled tubing drilling (UBCTD) units from four to ten to accelerate gas production for the Saudi state oil giant. The deal, which Baker Hughes booked in its third-quarter earnings, sent the company's stock up in morning trading, with investors responding positively to the long-term revenue visibility the contract provides. The stock was trading around $48, pushing its market capitalization to over $48 billion.
The agreement is designed to support both re-entry into existing wells and the development of new gas fields. According to the company's official announcement, the expansion will commence in 2026 and includes a comprehensive suite of integrated services, from drilling units and operational management to well construction and geoscience support.
“This project is the result of nearly two decades of successful collaboration between Baker Hughes and Aramco, which have set the standard for UBCTD,” said Amerino Gatti, executive vice president of Oilfield Services & Equipment at Baker Hughes. “By combining advanced technologies with a holistic, integrated approach, we can support Aramco to more efficiently access bypassed and hard-to-reach hydrocarbons and produce the resources that help the Kingdom thrive.”
This expansion is a key component of Saudi Arabia's broader energy strategy, which aims to boost natural gas production to meet rising domestic demand and free up more crude oil for export. Developing its vast unconventional gas resources, such as those in the Jafurah field where Baker Hughes already has a significant presence, is a cornerstone of this long-term vision.
The deal leverages Baker Hughes' advanced technology, including its CoilTrak™ bottomhole assembly system for precise drilling and reservoir analysis from its GaffneyCline™ energy advisory services. Underbalanced coiled tubing drilling is a specialized technique that allows for drilling in complex reservoirs with greater efficiency and safety, making it ideal for the geological formations found in the region.
The contract strengthens Baker Hughes' position in the competitive oilfield services market, where it vies with rivals like SLB and Halliburton for major international contracts. The Aramco award provides a stable, long-term project pipeline for its Oilfield Services & Equipment (OFSE) segment.
Analysts have maintained a largely positive outlook on Baker Hughes, with a consensus "Strong Buy" rating and an average price target of approximately $51.75, suggesting further upside potential. The company's third-quarter results, reported on October 23, showed revenue of $7.0 billion, a 1% year-over-year increase, with this new Aramco order contributing to a strong quarter for new business.
As global energy markets navigate a complex transition, the focus on natural gas as a cleaner bridging fuel continues to grow. This contract places Baker Hughes at the center of one of the world's most ambitious gas development projects, positioning the company to capitalize on sustained investment in the sector for years to come.