Saipem to negotiate the sale of core drilling businesses
Helmerich and Payne, Patterson-Uti, Pioneer Energy Services, Transocean and Noble, rumored to be potential buyers
Helmerich and Payne, Patterson-Uti, Pioneer Energy Services, Transocean and Noble, are rumored to be potential buyersinto Italian oil field services firm Saipem SpA, which is in discussions to sell both its offshore and onshore drilling units in separate transactions that would slice off about a 10th of the company’s annual sales, according to people familiar with the matter, as reported by Bloomberg.
Saipem is organized in five business divisions (Offshore E&C, Onshore E&C, Offshore Drilling, Onshore Drilling and XSight, dedicated to conceptual design) and is listed on the Milan Stock Exchange, being present in 60 countries worldwide with 32,000 employees of 120 nationalities.
The ailing offshore division, which suffered a 24% decline in revenue 2018, could go to a competitor.
Each division earned about 500 million euro in sales last year.
The two units are core to Saipem’s balance sheet, accounting for 11% of its total revenue.
The offshore drilling unit is tackling troubles due to the inactivity of its Scarabeo 5 and 8 rigs and weak crude prices.
Chief Executive Officer Stefano Cao said he didn’t expect much improvement in 2019.
While the onshore drilling division is a steady element of the company’s financial performance, the oil field servicing sector has struggled to recover from crude’s crash in 2014. Since then, the industry’s primary customers, which are oil companies, have slashed budgets and negotiated cheaper contracts.
Meanwhile, Saipem has been awarded new contracts in offshore drilling in Norway and Middle East, totaling over 200 million USD.
One contract was signed with the German company Wintershall for the drilling of 2 wells plus 2 optional ones in continuity with previous engagements for operations offshore Norway. The contract will be executed by the sixth-generation semi-submersible rig Scarabeo 8, a drilling unit capable of operations in harsh environments. The rig is expected to be under operation until approximately the second quarter of 2020.
The contract in Middle East involves a 4-year extension of the use of the high specs Jack up Perro Negro 7, a self-elevating drilling unit capable of operating in water depths of up to 375 feet; work commenced at the end of the first quarter of 2019.