Saipem wins $121m offshore drilling contracts in Cyprus and Ghana as fleet utilisation strengthens

Saipem SpA (Euronext Milan: SPM), the Italian offshore engineering and energy infrastructure contractor, has secured two new drilling contracts worth approximately $121 million from Eni subsidiaries for projects in Cyprus and Ghana. Announced on 27 October 2026, the contracts will employ the Saipem 10000 drillship and Scarabeo 9 semi-submersible drilling rig, strengthening the company’s contracted fleet activity across 2026 and 2027. The awards arrive as Saipem continues to focus on its offshore capabilities following the divestment of its shallow-water drilling operations in Saudi Arabia. With its first-half financial performance showing improved operating margins but continued pressure on reported profitability, the commercial question is how much additional value the contractor can extract from a more focused drilling fleet.

What do Saipem’s new drilling contracts in Cyprus and Ghana cover?

Saipem’s first contract has been awarded by Eni Cyprus Limited for drilling activities within the exclusive economic zone of the Republic of Cyprus. The work will be undertaken using the Saipem 10000 drillship, with operations expected to commence between November 2026 and January 2027. The announcement establishes a near-term mobilisation window but does not disclose the individual contract value, number of wells or precise operating duration.

The second award comes from Eni Ghana Exploration & Production Limited and covers drilling activities offshore Ghana using Scarabeo 9. Saipem has not published the separate consideration for the Ghana contract, meaning the combined $121 million cannot be reliably divided between the two rigs or geographic markets.

The contracts illustrate the continuing demand for specialised offshore drilling equipment in projects where operators require technically capable vessels and experienced contractors. Deepwater drilling assets involve substantial mobilisation, crewing, maintenance and operating costs, making contract continuity an important determinant of economic performance.

For Saipem, the appointments also reinforce its relationship with Eni across multiple international offshore markets. The two awards involve separate Eni operating entities, distinct jurisdictions and different drilling assets. They therefore provide work across more than one location, although both contracts remain linked to the same broader customer group.

That customer relationship offers potential commercial advantages because established technical familiarity can reduce coordination complexity between operator and contractor. However, repeated awards from related operating entities do not automatically establish improved pricing or stronger profit margins. Those outcomes depend on contract terms, operating costs and actual execution.

Why does improving drilling fleet utilisation matter for Saipem’s earnings?

Offshore drilling contractors operate a capital-intensive business in which vessels require expenditure on maintenance, certification, personnel and technical readiness regardless of whether they are generating contracted revenue. High-value drilling assets can consequently create significant operating leverage when contracts are secured at attractive day rates and executed efficiently. Conversely, gaps between assignments can reduce profitability even when the underlying vessels remain technically capable.

The Cyprus award provides a defined mobilisation window for Saipem 10000, while the Ghana contract adds activity for Scarabeo 9. Both contribute to the company’s stated objective of strengthening fleet utilisation visibility across 2026 and 2027. The eventual financial contribution will depend on how much of each contract’s value is recognised during those periods.

The announced $121 million represents aggregate contracted work, not immediate revenue or cash received. Contract execution will determine the timing of revenue recognition, while operating expenditure, mobilisation costs and potential contract-specific provisions will influence earnings.

Saipem’s portfolio changes are relevant to this calculation. The company announced completion of the divestment of its shallow-water drilling operations in Saudi Arabia in September 2026, narrowing the activities retained within its drilling business. The new contracts therefore support utilisation of assets remaining in the portfolio rather than reversing that divestment.

A more focused fleet may help management concentrate capital and technical resources on selected offshore opportunities. Nevertheless, reducing the breadth of a fleet can also increase the importance of individual asset availability, project scheduling and contract renewal timing. Stronger margins would require improved utilisation to translate into operating profit rather than merely greater headline contract activity.

How strong was Saipem’s financial position before the new drilling awards?

Saipem reported first-half 2026 revenue of €7.345 billion, an increase of 1.9% from €7.211 billion a year earlier. Adjusted EBITDA improved by 9.4% to €836 million, lifting the adjusted EBITDA margin from approximately 10.6% to 11.4%. The improvement demonstrates that the company’s operating earnings expanded faster than revenue during the six-month period.

Reported net profit nevertheless fell to €96 million from €140 million in the corresponding previous-year period. Adjusted net profit stood at €131 million, compared with €140 million a year earlier. The difference between operating improvement and the bottom-line outcome reflects the effects of factors below EBITDA, alongside non-recurring costs.

Saipem reported approximately €35 million of redundancy-related charges during the first half. Its financial performance was also affected by approximately €70 million of additional logistical, operational and employee safety costs associated with conflict-related disruption in the Middle East.

The company’s order intake provided a stronger indicator of medium-term workload. New contracts reached €5.737 billion during the first half, an increase of approximately 33.4% year on year. Its consolidated backlog stood at €29.861 billion on 30 June 2026, excluding the additional backlog of non-consolidated companies.

Of that June backlog, approximately €1.086 billion related to offshore drilling. Asset Based Services accounted for €18.663 billion, while Energy Carriers contributed €10.112 billion. These figures show that drilling is a comparatively small part of Saipem’s broader contracted portfolio, even though individual rig awards can meaningfully influence the utilisation and earnings prospects of the drilling division.

The October awards increase contracted activity after the June reporting date, but the updated total backlog cannot be calculated simply by adding their value to the earlier figure. Work completed, additional awards, currency movements and portfolio changes would all affect the outstanding balance.

How does Saipem’s balance sheet support offshore fleet operations and future contract execution?

Saipem reported a pre-IFRS 16 net cash position of €1.078 billion at 30 June 2026, compared with €999 million at the end of 2025. Including IFRS 16 lease liabilities, the company had net debt of €109 million, down from €272 million at the previous year-end. These measures provide different views of the financial position because one excludes lease obligations while the other incorporates them.

The company also generated €388 million of free cash flow after repayment of lease liabilities during the first half. This supported financial flexibility despite dividend payments of approximately €330 million and additional operating costs connected with regional disruption.

For a contractor managing expensive drilling vessels and major offshore construction assignments, cash generation is commercially important because expenditure often precedes final customer settlement. Maintenance, vessel mobilisation, specialised equipment and project staffing can create significant cash requirements before individual contracts are completed.

The improved balance sheet gives Saipem greater flexibility to support existing assignments and pursue new opportunities without relying exclusively on incremental external borrowing. However, available liquidity should not be treated as proof that all future projects will earn attractive returns. Capital discipline and contractual protections remain important determinants of sustainable profitability.

In its July financial update, management retained full-year 2026 revenue guidance of approximately €15.5 billion and adjusted EBITDA guidance of around €1.75 billion. It also indicated an expectation of approximately €600 million in free cash flow after repayment of lease liabilities. These were management forecasts rather than realised financial outcomes, and the company had acknowledged uncertainty around recovering additional Middle East-related costs.

The new offshore drilling contracts strengthen workload visibility, although their contribution to full-year financial performance will depend on actual commencement dates and project execution.

What does Saipem’s share-price recovery suggest about investor expectations?

Saipem shares closed at €4.481 on Euronext Milan on 30 October 2026, declining approximately 1.23% during the session. The shares had gained about 2.9% over the preceding month and approximately 84.8% since the beginning of 2026, based on market data available at that close.

The strong year-to-date recovery indicates that the equity valuation has improved substantially during the year. Such performance creates a higher threshold for incremental contract announcements to influence investor expectations, particularly when new awards are relatively modest compared with the group’s multibillion-euro backlog.

The new contracts support a positive operational interpretation because they contribute to fleet utilisation and provide work across two offshore markets. Their immediate financial scale is nevertheless limited relative to Saipem’s expected full-year revenue of approximately €15.5 billion.

Investors therefore have reason to distinguish between contract acquisition as evidence of continuing customer demand and contract acquisition as evidence of improving shareholder returns. Stronger operating margins, reliable cash generation and profitable execution are more decisive indicators of whether the business is meeting expectations embedded in its valuation.

The 30 October closing price also followed a week in which Saipem shares traded between approximately €4.43 and €4.59. Although the stock was higher than its 26 October closing level, the sequence does not establish that the Cyprus and Ghana awards were responsible for the movement. Broader energy-market conditions and company-specific expectations may also have influenced trading.

What could strengthen Saipem’s offshore drilling business during 2027?

The immediate operational milestones are mobilisation of Saipem 10000 for Cyprus and execution of the Ghana assignment using Scarabeo 9. The company’s ability to transition these assets into contracted work without substantial idle periods will influence the economics of the awards.

Subsequent fleet-status information would help establish whether the new assignments have improved overall utilisation or largely replaced contracts approaching completion. That comparison is necessary because a new award can strengthen future visibility without necessarily producing a net increase in utilisation.

Saipem’s wider business also provides context for evaluating the awards. Offshore construction and energy infrastructure projects remain far larger components of its backlog than drilling, meaning the group’s earnings trajectory will continue to depend heavily on major project delivery across multiple markets.

The drilling contracts contribute to portfolio continuity and customer relationships, while the group’s balance-sheet improvement provides financial support for execution. A stronger investment case would emerge if future financial results show that higher fleet utilisation is accompanied by improved drilling profitability and continued cash generation. Conversely, extended mobilisation delays, operating-cost escalation or weaker contract economics could limit the contribution of the new work.

Saipem’s $121 million Cyprus and Ghana awards provide incremental support for its offshore drilling operations as the company reshapes its fleet portfolio. The next meaningful evidence will come from actual vessel deployment, updated backlog disclosures and financial results showing whether contracted activity is converting into durable operating earnings.

What are the key takeaways from Saipem’s $121 million Cyprus and Ghana drilling contracts?

• Saipem secured two offshore drilling contracts with a combined value of approximately $121 million.
• Eni Cyprus Limited awarded work involving the Saipem 10000 drillship.
• Eni Ghana Exploration & Production Limited awarded offshore drilling work involving Scarabeo 9.
• The Cyprus assignment is expected to commence between November 2026 and January 2027.
• The contracts strengthen fleet utilisation visibility across 2026 and 2027.
• Saipem reported first-half revenue of €7.345 billion and adjusted EBITDA of €836 million.
• The group’s backlog stood at €29.861 billion at 30 June 2026, including approximately €1.086 billion of offshore drilling work.
• Pre-IFRS 16 net cash reached €1.078 billion at the end of June, supporting financial flexibility.
• Saipem shares closed at €4.481 on 30 October following a substantial year-to-date recovery.
• Vessel mobilisation, contract profitability and operating cash flow will determine the economic contribution of the new assignments.