The three-year contract, with an option for an additional year at a fixed price, is expected to start on 30 September.

Hercules will earn a total of $291m over three years, along with a further payment of $25m for transporting the rigs to the Gulf of Mexico.

The deal follows speculation earlier this month that Houston-based Parker Drilling Company could end its joint venture with the local Abdullah Rasheed al-Rushaid Company after incurring an estimated $20m loss in a contract to supply rigs to Saudi Aramco (MEED 18:3:08).

Saudi Arabia expects to increase its rig count to about 120 by the end of 2008, from less than 50 rigs in 2005, in an effort to boost oil production to 12.5m-barrels-a-day by 2009.