Bloomberg News

Baker Said to Be Favorite for Petrobras Drilling Contract

August 21, 2014

Baker Hughes Inc. (BHI:US) is poised to win the biggest contract in Petroleo Brasileiro SA (PETR4)’s $1.5 billion to $2 billion offshore drilling program after placing the lowest-cost bid, two people with knowledge of the tender said.

The contract represents half the drilling work being offered by the world’s biggest ultra-deepwater producer over the next four years, the people said, asking not to be named because the information hasn’t been made public.

Schlumberger Ltd. (SLB:US) offered the cheapest bid for a second package representing 30 percent of offshore wells and Halliburton Co. (HAL:US) placed the lowest-cost offer for the remaining 20 percent of work, they said. Baker Hughes will charge Petrobras less per well compared with the other two drilling packages that have smaller volumes of work, the people said.

Petrobras, based in Rio de Janeiro, invited bids for fresh contracts after a reduction in the company’s drilling fleet eroded suppliers’ margins, the people said. Halliburton had the 50 percent package under the previous contract, they said. The value of the three new contracts is subject to change depending on levels of activity.

Schlumberger declined to comment on the results of the tender in an e-mailed response while Baker Hughes didn’t immediately offer comment when contracted by e-mail and Petrobras said it doesn’t comment on bidding processes.

“Tenders were submitted last week but there haven’t been any official awards made at this point,” Emily Mir, a spokeswoman at Halliburton, said in an e-mailed response.

Suppliers to Brazil’s oil industry have cut staff over the past year to adjust to lower-than-expected demand as Petrobras seeks to contain costs. The company trimmed its five-year business plan to $220.6 billion earlier this year.

To contact the reporter on this story: Peter Millard in Rio de Janeiro at pmillard1@bloomberg.net

To contact the editors responsible for this story: James Attwood at jattwood3@bloomberg.net Carlos Caminada


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Companies Mentioned

  • BHI
    (Baker Hughes Inc)
    • $53.49 USD
    • -0.63
    • -1.18%
  • SLB
    (Schlumberger Ltd)
    • $97.24 USD
    • -1.02
    • -1.05%
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