Diversified oil and gas services yield MENA growth for NESR

Multinational

Sherif Foda, chairman and CEO of National Energy Services Reunited (NESR), talks to The Energy Year about how US tariffs can create new opportunities in the MENA region, the reasons behind the company’s success and why it is unique. NESR offers a range of products and services for production, drilling and evaluation.

Do US tariffs create new opportunities for countries in the MENA region?
Yes, and particularly for the manufacturing sector in the MENA region. With any new or enduring tariffs abroad, local producers have a cost advantage for exporting. While the US tariffs appear to be temporary negotiation tactics that will eventually lead to several deals, with the entire process designed to make a 10% tariff appear like a favourable outcome psychologically, the past several months of tariff-related uncertainty only support the notion that domestic manufacturing is a strategic position that should be pursued.
The markets have already rebounded, which tells you confidence is returning, barring any serious geopolitical conflicts. However, an increasingly polarised economic world places a premium on domestic supply chains, and our position as a national champion is strengthened by this competitive advantage.

NESR posted significant growth in 2024. What explains the performance?
We grew more than 15% year-on-year, and our EBITDA was USD 310 million. When you’re smaller than the big players, which NESR is, you can grow faster than the market, especially when entering new countries. We’re about 5-10% of the market in many areas, so we still have room to grow. Even if the market stagnates, we can grow 6-8%.
We’ve proven this in Kuwait and Oman, where we became key players and still plan to grow by adding new service lines to our portfolio. For instance, for the first time, we’re operating in the slickline segment in both countries. It marks a major step forward for us and shows how quickly we can enter and expand into new service lines when opportunities arise.

What message do you have for smaller companies trying to replicate NESR’s growth?
Frankly, our model is very difficult to replicate. We built NESR by merging companies to form a regional champion, which required aligning cultures and shareholders. That is our key differentiator. In the Middle East, you have a lot of local companies that are very successful in their country, but not in others, and multinationals that struggle locally due to culture, structure and finance.
I took NESR public before we were even an operating company by listing through a SPAC [special purpose acquisition company] on NASDAQ. That forced all participants into US governance and compliance structures, but our footprint remains entirely in the MENA and Asia-Pacific regions. That’s not something local players can easily mimic.

Why didn’t you list NESR on the domestic stock exchange?
The NASDAQ and NYSE are huge exchanges in terms of volume and maturity. We had to set up a SPAC for our listing, and they don’t exist in the region, so technically, I could not do it in any country here if I wanted to IPO and raise funding without an operating company. However, local markets are improving.
The Tadawul in Saudi Arabia is now in the top 10 globally. While we initially needed scale and sophistication, I raised USD 230 million even before doing anything and then merged two companies, generating revenues of more than USD 400 million. We have since grown to USD 1.3 billion. Going forward, dual listing is possible when exchanges allow it and manage the liquidity.
Having said that, the local investment culture is different. US investors are used to risk and a lot of untraditional financial vehicles. They’re fine betting on a company that might grow tenfold or go bankrupt. The bankruptcy protections in the US enable that. In our region, investors prefer to go with what they know and expect dividends as returns in addition to potential share price appreciation.

How has your growth strategy shifted since NESR’s early days?
We began with mergers to build scale. Two of the largest companies in the Middle East were our foundation. Once we hit the half-billion-dollar mark, we expanded geographically to Saudi Arabia, Oman, UAE, Qatar and Iraq. Then we moved into Kuwait, Egypt, Algeria and Libya. Now our strategy is organic growth with a strong focus on technology and IP [intellectual property] development.

What is your approach to technology partnerships?
We are an open platform for innovation. We invest in startups and own stakes, but we let them remain independent to avoid bureaucracy. We also partner with others to bring North American tech to the MENA region. We do full technology transfer. We hire locally, train locally and co-develop improvements. We don’t operate as agents; we become an extension of the technology provider. In addition, we develop our own in-house technology, such as our Roya platform.

What is NESR doing differently to make ESG a priority?
A lot of people are talking about it, but they’re not doing it yet. You have two parts of ESG that are very important. You have the part that is internal compliance, governance and reporting. That’s what everybody should do. It should be like HSE; it should be the licence to operate. All this should be part of your DNA and your culture.
And then you have the other part, which is the most important for me and the business: Can you decarbonise the way you operate? Can you conduct your oil and gas operations more responsibly, reducing flaring and emissions? This is the part where, as an industry, we have room for improvement, especially because it’s going to be energy addition, not transition. As NESR, we want to make those tools and technologies available for the client while making economic sense.
Water is our best example of ESG in action. We extract minerals from produced water and convert them into saleable goods such as salt or magnesium, in addition to rare earth minerals.

What’s your ultimate vision for NESR?
We want to reach USD 2 billion in revenue. We aim to be in the top three in every market segment and geography we serve. Additionally, we are aiming to build a USD 500-million business arm in decarbonisation, alongside our core oilfield services.
It’s about scale and responsibility, and delivering energy efficiently while setting a new benchmark for sustainability by providing reliable energy to the world with the smallest carbon footprint possible.

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