BAE confirmed the news in a statement, saying: "This is a positive step towards agreeing a contract for our valued partner.
"We are committed to supporting the kingdom as it modernises the Saudi Armed Forces and develops key industrial capabilities critical to the delivery of Vision 2030."
It comes on the final day of a three-day official visit by Saudi Arabia's Crown Prince Mohammed bin Salman, which included talks with Prime Minister Theresa May, the Archbishop of Canterbury, and an audience with the Queen.
Sky News Defence Correspondent Alistair Bunkall said the deal is expected to be announced by Defence Secretary Gavin Williamson and the Crown Prince later this afternoon.
Bunkall said that the memorandum of intent still required the details to be ironed out before a final contract is signed, but he added: "You wouldn't expect things to go backwards now though.
"A recent example is Qatar who signed a statement of intent for 24 Typhoons in September 2017 and then final contract in December 2017."
Before his visit, the 32-year-old Crown Prince Mohammed bin Salman had emphasised the importance of the relationship between the UK and Saudi Arabia regarding security.
He said both countries would be "much safer if you have a strong relationship with Saudi Arabia".
Mrs May defended the UK's ties with Saudi Arabia earlier this week, saying all arms sales are strictly regulated.
But she has also raised concerns about the humanitarian crisis in Yemen with Prince Mohammed during his visit to the UK.