Wachovia: Petrobras in Rig Contract with Transocean
Wachovia Capital Markets analyst Tim Curran says in a note to investors that Transocean will lease-purchase and manage a newbuild drillship that Brazil’s Petrobras is building to use for projects offshore the West African nations of Angola and Nigeria.
Curran says Transocean will run the drillship under a 10-year contract, with an option for a 10-year extension. Transocean will buy the unit for $1 after the lease expires in 20 years.
Curran says a lot of people are surprised Petrobras gave the contract to Transocean instead of a Brazilian company.
“At face value, it seems like a net positive,” the analyst wrote. “As it (1) enables Transocean to add yet another ultra-deepwater newbuild to its fleet, bringing the total to 28 including 10 under construction, with a meaningful earnings impact as early as 2009; and (2) reinforces that, despite recent, aggressive local content rhetoric, Petrobras will continue to look to the established drillers to play a key role in equipping its upstream expansion plans, be it in Brazil or anywhere else.