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Petrobras in Rig Deal with 3 Firms

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State-controlled energy company Petroleo Brasileiro S.A. or Petrobras (PBR) inked a vessel chartering and operating deal with the trio Sete Brasil, Odebrecht S.A. and Etesco.

Per the deal, nine drilling vessels will be manufactured in Brazil and chartered to Petrobras thereafter for 15 years. These rigs form the last leg of the set of 21 rigs that was awarded to Petrobras by Sete Brasil in an agreement signed in early February.

Out of the nine contacted rigs, six will be constructed at the Enseada Paraguaçu shipyard in Maragogipe. Four of these vessels will be operated by Odebrecht and the other two by Etesco. The remaining three drilling vessels will be set-up at the Rio Grande 2 shipyard and Etesco will operate them.

These drilling vessels will be constructed using local content of about 55%–65%. The rigs – slated to be delivered in 2016 – have a drilling capacity of up to 32,808.4 feet, and are able to operate in water depth of 9,842.5 feet. The rigs will be used for exploration activities in the pre-salt layer of Santos Basin.

Headquartered in Rio de Janeiro, Petrobras is the largest integrated energy firm in Brazil, dominating the country’s energy sector. The company produces a lion’s share of South American country’s crude oil and natural gas, and accounts for almost all of the country’s refining capacity.

In early August, Petrobras reported second-quarter 2012 loss of R$1.3 billion or R$0.11 per share, compared with earnings of R$10.9 billion or R$0.84 in the year-earlier quarter. Loss per ADR came in at 10 cents (1 ADR = 2 shares), far worse than the Zacks Consensus Estimate of 33 cents in profit.

The company’s net operating revenues of $34.7 billion were down 9.4% from the second-quarter 2011 level. Quarterly results were dragged down by a weak domestic currency, rising costs and heavy fuel imports.

Petrobras – which is the fourth biggest company by market capitalization after ExxonMobil Corp. (XOM), Royal Dutch Shell plc (RDS.A) and Chevron Corporation (CVX) – currently retains a Zacks #3 Rank (short-term Hold rating).

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