Al Qaeda militants killed two Saudi men on Wednesday accused of spying for the United States in Yemen, a day after the terror group announced that its leader was killed by an American drone strike.

Residents in the city of Mukalla – where Yemen’s Al Qaeda offshoot has been freely operating – told Reuters that the militants claimed the men planted tracking chips that enabled U.S. drones to target and kill the group’s leadership.

"They executed two Saudis, named al-Mutairi and al-Khaledi. They put the two men on the corniche in the city of Mukalla... they opened fire at them in front of a big group of residents," one resident, who spoke on condition of anonymity, told Reuters.

Images posted on social media by Al Qaeda supporters showed militants surrounding two blindfolded men who were kneeling on the sand.

One man’s corpse was later pictured hanging from a bridge underneath a banner reading “the House of Saud directs American planes to bomb the holy warriors."

In a series of online postings, Al Qaeda members said one of the two men shot dead Wednesday was a Saudi national loyal to the Islamic State. They said he ran an Al Qaeda-linked media outlet and was close to top leaders.

Residents also told Reuters Wednesday that a suspected U.S. drone bombed a hotel in Mukalla used by Al Qaeda militants, killing several people.

The strike came a day after Al Qaeda in the Arabian Peninsula (AQAP) announced that its leader and the terror organization's second-in-command, Nasir al-Wuhayshi, had been killed in a U.S. drone strike.

A counter-terrorism source who tracks social media accounts tied to Al Qaeda and ISIS told Fox News late Monday that a credible account based in Yemen was reporting that al-Wuhayshi had been killed in the CIA strike and that his deputy, Qassim al-Rimi, had been named as AQAP's new leader.

Al Qaeda captured Mukalla in April after Yemen's army splintered between allies and opponents of Shiite rebels known as Houthis, who captured the capital last year. But the city has proven to be something of a death trap, with U.S. drone strikes in and around Mukalla killing not only al-Wuhayshi and commander Nasr al-Ansi, but also a senior religious ideologue, Ibrahim al-Rubaish.

AQAP is widely seen as the terror network's most dangerous offshoot, and claimed the attack on the offices of French magazine Charlie Hebdo in January, which killed 12 people. It also has been linked to a number of attempts to attack the United States with bombs sneaked past airport security.

Click for more from Reuters.

The Associated Press contributed to this report.