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Few industries are as synonymous with a region as the energy industry is with the Middle East and North Africa. As of 2023, more than 55 percent of the world’s known oil reserves were held in the Middle East, giving it a hugely consequential role in determining global energy prices, as well as a strong geopolitical influence.
The international significance of the regions energy supply means it has long been associated with foreign corporations and interests.
Sherif Foda, Chair and CEO of NASDAQ-listed oilfield services provider National Energy Services Reunited (NESR), is a pioneering figure in the Middle East and North African energy industry, and is hoping to represent the region on a global scale.
“I started this company to establish the first energy corporation of its kind on a major United States stock exchange. Today, I can proudly say that we have achieved just that,” he tells The CEO Magazine.
Oil was first discovered and extracted in the Middle East and North Africa by western companies in the early 19th century. While the companies’ interests were ultimately maintained by military strength, the nationalization movements in the mid-to-late 20th century saw Arab states take control of oil extraction from these companies.
This has paved the way for a more collaborative approach, where nations began to work in a more equal partnership with foreign companies.
Although the control of foreign corporations was reduced, the industry still relied heavily on the services of international firms to run its oilfields. This is a dynamic that Foda has witnessed since he first joined the industry, with the American oilfield services giant – now a NESR competitor – Schlumberger.
“I started my career in December 1993, so I’ve been in the industry for around 30 years. Twenty-five years of them were spent with Schlumberger, in different roles around the world,” he says.
“I was the President of Europe, Africa and Russia, before becoming an executive officer of the company of Schlumberger Worldwide, for what we call the Production Group. I was based in Paris and then Houston, and we ran worldwide, which had around 140,000 employees and a turnover of around US$50 billion.”
After climbing to the pinnacle of one of the biggest players in the global oil industry, Foda decided he wanted to embark on a new, ambitious challenge.
“I had seen the industry for more than 25 years before starting NESR, and the majority of the companies operating in the region have always been either multinational or foreign companies,” he says.
“At the time there was no big national company native to the region that could work across multiple industries and multiple countries. The region has successfully had a lot of oil operator companies, but not a service company.”
Foda began to consider the possibility of launching his own venture, native to the region and utilizing the plentiful resources it had.
“I saw no reason why the region, with all the talent, people, infrastructure and investment, could not have a large multi-asset that worked across multiple countries; one that would allow people to move freely from Saudi Arabia, Kuwait, Iraq, the Gulf Cooperation Council (GCC) countries and North Africa, and allow them to operate together,” he says.
“It was a very ambitious target because we were the first to attempt it, but also because we didn’t have the backbone of 100-plus years of experience that others have.”
The journey to reaching the NASDAQ in 2018 began with a fundraising mission, which involved attracting investment from around the world.
“We first made a special purpose acquisition company, and raised capital from major funds in the United States, Europe and in some Middle East family offices and put together US$250 million,” Foda recalls.
“We then raised an additional US$700 million where we combined the two major companies from Saudi Arabia, Iraq, United Arab Emirates and Oman by fusing them together.”
The group has continued to expand, and has seen truly remarkable growth.
“We have then added the acquisition of two companies over the span of five years to reach the mark of a US$1.2 billion company. We started with less than 2,000 employees, and today, we have almost 7,000 employees. So the growth over the last five years has been phenomenal,” he says.
“It was a risk, but a risk worth taking. We are the largest company of its kind in the region, from the region.”
For all the successes of the past seven years, Foda is motoring ahead with his ambition for yet more growth for NESR. He sees expanding its technological capabilities as central to achieving this.
“The target is to double the company size in the next three-to-five years,” he says. “To be able to do that, there is an introduction of what we call the advanced drilling solutions.”
This strategy is centered on investment into its research and development capabilities. “We have invested in research and development, again, like the multinational in the United States, to develop our intellectual property around advanced drilling tools,” he says.
To this end, NESR bought a minority stake in Houston-based WD Von Gonten Engineering with the goal of enhancing reservoir characterization, as well as its geological and geophysical analysis.
“This technology will allow us to penetrate the market, characterize the reservoir and be able to drill horizontal wells using our Roya home grown directional drilling technology,” Foda elaborates.
This acquisition complements its existing technology and research center in Saudi Arabia, the NESR Oilfield Research & Innovation Center, or NORI, a name which translates to ‘my light’ in Arabic.
NORI was established in Saudi Arabia’s Dhahran Techno Valley on the principle of open collaboration between international innovators, in order to transform scientific research into applied solutions in the energy sector. One of the laboratory’s key collaborators is Saudi Aramco, the state-owned energy giant that is the world’s fourth-largest company by revenue.
Key focuses of the 9,000 square-meter facility also include fostering a circular economy, sustainability and in-country value. Localization is one of NORI’s three core foundations, along with collaboration and technologies. It is also a key element of Saudi Arabia’s Vision 2030, and attracting the world’s top scientific minds to the nation will certainly help.
“It allows for interchangeable research and development and technology between the United States, Saudi and the region,” he says. “We are also planning to open another one in Kuwait in the future.”
Foda stresses the importance of this continued R&D spend to ensure the company’s expansion.
“It is enabling the growth for the company to keep going, because it’s important, if you look at it from the medium to the long-term, to establish proper research and development, IT and technology,” he says. “This makes sure that you continue to grow without being commoditized by the local players.”
When asked about the challenges that the company has faced in recent years, Foda bucks the trend of referencing the COVID-19 pandemic as a uniquely tough time.
“The main challenge for us honestly has not really been the COVID-19 pandemic and supply chain, which, obviously, was challenging for infrastructure and shipping,” he reveals.
Instead, since they went public in the United States, a core challenge has been to maintain compliance across his team, which has required a sizable amount of technological investment to do so.
“The main challenge for us was getting our local team to understand the compliance requirements of the United States,” he says.
“What we strengthened, and what we’re going to continue to strengthen, is that knowledge of the compliance enterprise resource planning system, and we are implementing SAP across the company. This will also ensure that this growth can be backboned by strong financial supply chain knowledge.”
Foda elaborates upon the unique requirements that becoming a publicly traded company entails, especially from a local perspective. “Being public in the United States market is not something that is common in the Middle East, so it is very unique to us,” he says.
“A lot of people have to understand the reporting of the United States’ generally accepted accounting principles, financial quarterly reporting, compliance and materiality level, to name a few. All this is new to many in the local financial team.”
He credits the rate at which his team has adapted to this, but wants them to keep pushing the envelope.
“That’s what we have strengthened and established in a very rigorous way,” he says. “That’s the focus for the coming couple of years – to ensure that this remains solid in order to maintain that growth, without needing to look at the infrastructure system.”
It is an unwavering and ambitious focus on achieving growth that defines Foda’s leadership of NESR, and the primary metric by which he measures its progress.
“For NESR, the definition of success is simply the growth of the company, which means that we are successful. I like to measure success by KPIs; by numbers, not by feelings,” he says.
“So you must have a growth of the top line and the bottom line. If this is accomplished, that means that all the other line items have been accomplished because all these are the enablers for growth to happen.”
Its KPIs are characteristically ambitious, with Foda expecting the company to set the standard for the industry.
“We are looking at outgrowing the market,” he says. “We think the market is going to grow naturally by six-to-eight percent a year, and we are giving ourselves a target of 10–15 percent every year. We want to grow the bottom line faster than the top line.”
The company has also focused on employing nationals in the countries it operates in. The region has seen large demographic shifts in recent history, with increasing levels of migration from less economically developed neighboring countries.
In response, GCC countries have implemented ‘nationalization’ policies that incentivize firms to prioritize native workers over expatriates, with the aim of strengthening the local workforce and reducing reliance on foreign labor.
“In Oman, more than 80 percent of the workforce are locals. In Saudi, more than 60 percent. We have countries Algeria, Egypt and Iraq, where that number is as high as 100 percent,” Foda says.
“That is a measure of success, because it means that you can train the local workforce faster to be able to achieve the desired growth.”
Aligning the company with these nationalization policies is one element that fits into Foda’s broader strategy of realizing further success for the company.
“If you manage to grow the company with the KPIs, and you manage to get local and national people to do the work, and you’re managing and improving the infrastructure because you have strong financial results that enable you to spend money to do all this – that means the company is very successful,” he says.
And for Foda, his own personal sense of success is inextricably tied to the financial performance of NESR.
“I measure myself as the leader of the company as the same as what the company achieved,” he says. “If the company did not achieve, that means I did not achieve.”
When defining what truly separates NESR from its competition, Foda lauds the benefits of being a local brand. He explains that this gives customers added security and familiarity without the need to sacrifice on standards.
“We are a local company, but but we operate with international, top-class standards in every country we are in. That is easier said than done,” he says. “A lot of people have tried it, but have not got it to really work.
“With us, people get a local company so they are more comfortable, and the majority of the countries they also look at the in-country value for their targets. However, they get the same standard, the best in class of the best multinational company that exists in the world.”
Foda also highlights its unique R&D prowess, which he says will maintain its status as an industry leader for years to come.
“The second phase of it is we need to make sure we have technology and our own research and development, which makes the clients feel comfortable that they can rely on us,” he says.
“We will be able to continually cater for the technological advancements that happen in the industry.”
Maintaining effective supplier relationships is important for NESR, as it is for any high-functioning business. But its loyalty is not unconditional, and it makes sure that its long-term relationships are rooted in high-performance.
“It’s a multi-faceted approach,” he says. “On the commodity products that we buy, we try to establish a long-term relationship with major suppliers while maintaining a competitive tendering and bidding process.”
Across the different nations NESR operates in, Foda often finds that this rigorous bidding process often lends itself to cordial relations.
“We look at who can supply us in the different countries we operate in, and after a very strong bidding process we often develop very strong relationships,” he says.
He also stresses the need to secure its supply chain in what is a volatile environment. “We need to make sure we have a very strong A, B and C supplier, so that if something happens to one, you have alternatives,” he says.
Foda identifies three key benefits of effective supplier relationships, which contribute significant value to the company.
“Number one would be the rapid transfer of knowledge,” he says. “So as an example, I get the best-in-class person for hydraulic fracturing in the United States, who has done hundreds of thousands of wells and they had a learning curve of seven years.
“I took that technology, delivered it in the region in a matter of months, and I saved all this learning time and learning curve if we had to establish it on our own. So that is perhaps the most important benefit.”
Below is a list of key strategic partners of NESR, which facilitate its position as an industry leader.
Beyond Energy: Providers of well servicing and energy solutions for the oil and gas industry, and experts in managed pressure drilling. Based in Calgary, Canada.
Scout Surface Solutions: Specializes in products and services primarily focused on surface wellhead equipment, fracking fluid delivery systems, asset management and repair programs. Based in Dallas, United States.
Forum Energy: Global oilfield products company providing highly engineered equipment for drilling, subsea, completion and production operations. Based in Houston, United States.
Caterpillar: Also known as Cat, the company is a key provider of industrial machinery used worldwide across the energy, mining and construction industries. Based in Dallas, United States.
Flotek Industries: Specialize in chemistry-based technology and services for energy companies, particularly in the area of wellbore production and flow assurance. Based in Houston, Texas.
Phoenix Technology Services: Providers of directional drilling services and technology for the oil and gas industry, supporting drilling efficiency and accuracy, catering to energy projects in North America and internationally. Based in Calgary, Canada.
The second key benefit he identifies is having reliability, which Foda says is especially crucial in moments of crisis.
“Security of supplies, which gave us the positive experience that we had with the pandemic,” he says. “If you don’t have a long-term relationship with some of your major suppliers you’re not the priority for them, and when disruption happens you might be at the bottom of the list.
“So you will not get your products on time and you will fail to deliver to the customer. During the pandemic, we were top in class because we had very strong supplier relationships.”
Finally, Foda touches on the perks of having access to cutting-edge technology previously unseen in the region. “The third would be access to unique, exclusive technology. I can bring things to the region that nobody else has access to because some of our partnerships are with people from outside the industry,” he says.
“I have, for example, a company in Germany that works in a totally different industry, whose technology we thought would be effective in the energy industry,” he says. “I brought them in, and now we are utilizing its technology, which nobody else has access to.”
As persistent as Foda’s drive for achieving growth is, it isn’t just for the sake of having a bigger number on the bottom line. He outlines the significance of having a local company achieving global success, and how he sees it as a part of a wider movement of entrepreneurial progression and growth in the Middle East and North Africa.
“In the region, there is a lot of ambition to take national companies international,” he says. “The region is capable of doing that, and we can actually demonstrate that this is possible.”
Without a driven and capable workforce, this success could not have been realized. Such is the strength that Foda recognizes in his workforce at NESR, he sees no reason why the people of the region cannot drive the region forward.
“In business, if human capital is very strong, then the company itself will become very knowledgeable and very strong,” he says. “The region has the talent and the human capital. With the large amount of young people we have in the region, with 70 percent of the population below the age of 30, they have the opportunity to make a difference.
“I think NESR demonstrated that this is possible. The same level of success is also possible in other industries, not just in ours.”
With this growth, Foda is confident that businesses can drive an increase in living standards across the region, which he identifies as the true success of a business.
“I think that’s really the key success for companies, that they can have a positive impact in the countries they work in. They can have a positive impact on the lives of its people and its communities,” he says.
“The people can be satisfied, happy and successful. Their families can be successful and they will be able to raise their kids in a great environment. And what’s more important than that?”
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