OSX Shares Take a Big Hit After Brazilian Shipbuilding Plans Are Canned

(Bloomberg) — OSX Brasil SA, the shipbuilder controlled by billionaire Eike Batista, fell to the lowest in more than four months after Petroleo Brasileiro SA canceled a contract for five drillships it was expected to build.

OSX, based in Rio de Janeiro, fell 6.7 percent to 8.96 reais at 1:02 p.m. in Sao Paulo. Earlier it slid as low as 8.85 reais, the lowest intraday price since July 12 and the biggest percentage decline since Sept. 26.

Petrobras, as the biggest producer in deep waters is known, canceled plans to charter five drillships from Ocean Rig UDW Inc because higher-than-expected production rates at deepwater wells reduced its drilling equipment needs, the Rio de Janeiro-based producer said yesterday.

OSX was expected to win the contract because it has the only shipyard in Brazil with enough spare capacity to do the job, Auro Rozenbaum, an analyst at Banco Bradesco SA, said in a telephone interview from Sao Paulo. OSX was also expected to get part of the revenue from renting the vessels to Petrobras, Rozenbaum said.

OSX’s press office didn’t immediately answer telephone calls or reply to an e-mail seeking comment.