Petrobras approves order for 7 deepwater rigs for $4.64B

Petrobras’ board of directors approved the bidding process for the construction, in Brazil, of the first seven of a total of 28 offshore drilling rigs intended to meet its long-term drilling program with priority given to the pre-salt wells. The new rigs are expected to come into operation in 2015. The remaining 21 rigs will also produced in the country.

During the construction period, 32,000 thousand direct and indirect jobs are hoped to be created in eight years. In the operation phase, meanwhile, there will be 10,000 new positions (direct and indirect) for a period of 10 years.

The winner of this first lot was the Estaleiro Atlântico Sul shipyard (EAS), located in the state of Pernambuco, for a final price of $4,637,000,130.00, i.e., $13,000,000.00 less than the original proposal. Slated to start operating in 2015, each rig’s final price was set at $662,428,590.00.

The charter contract will be signed with Sete Brazil S.A. (Sete BR), which will take on the construction contract with EAS. Sete BR is a company formed by the Fundo de Investimentos em Participa̵̤es РFIP Sondas, which is managed by the Caixa Econ̫mica Federal (CEF), owns 90% of the company, and will have market investors as shareholders, including Brazilian pension funds and investment banks. Petrobras will hold a 10% stake in the new company.

Sete BR will allow companies that are experienced in operating rigs while providing services hired by Petrobras to be partners and co-owners of the drilling vessels. The daily charter rate has already been defined and, when added to the current average operation rate, totals $430,000 to $475,000 per day, in line with the most competitive rates practiced on the international market.

To finance rig construction, Sete BR will count on its own capital, on capital provided by partners, and on resources derived from long-term funding granted by the National Development Bank (BNDES), which will fund the portion related to the Brazilian good and service content for the construction of each rig. Additionally, there will be resources coming from the export development agencies of the countries that provide the content to be imported and from commercial banks. To their benefit, the funders will have a performance guarantee hired by the EAS shipyard and a credit guarantee contracted by Sete BR, both supplied by the Shipbuilding Guarantee Fund (FGCN), which had its capacity expanded specifically to address this type of guarantee.

With the Rig Project, Petrobras aims to foster conditions for it to be technically and economically feasible to build next-generation platforms to operate in deep and ultra deep waters in Brazil, as it did with production platforms, which today are entirely produced in the country and within global quality parameters.

The Executive Board also decided to cancel another bid that was in progress for the hiring of up to two drilling rigs on account of the prices that were quoted, as they were not advantageous to the Company.The third bidding process, to charter lots of up to four drilling rigs, is still under review and is expected to be completed within 30 days.