Petrobras decision might hurt drillers

Petróleo Brasileiro S.A aka Petrobras is planning to release details from a programme dubbed Procop that is to address its cost base in December. The goal is to optimize operating costs and media in the know has thrown numbers in between 5 and 15 billion reais (2-6 billion Euros or 14-42 billion NOK). This will have an effect on contractors of the company.

Newspaper Dagens Næringsliv (DN) interviewed industry experts on the matter. They opinionated that there is likely to consequences on its drilling activities, which in turn could pressure mid/deepwater segment where rates can be under pressure from an industry oversupply. DN listed firms such as Fred. Olsen Energy (OSE: FOE), Songa Offshore (OSE: SONG), Seadrill (OSE: SDRL) Awilco Drilling (OSE: AWDR) as those affected. A. P. Møller-Mærsk (OMX: MAERSK A, MAERSK B) could be affected to a lesser degree. Additionally offshore vessel makers, sellers and renters are likely to think of what is coming as well.

Fred Olsen Energy nets contract extension

Offshore oil and gas industry exploration and production services provider Fred. Olsen Energy ASA (OSE: FOE) said its subsidiary Dolphin Drilling Ltd has received a three year drilling contract from the British North Sea for semi-submersible drilling rig Byford Dolphin from BP Exploration Operating Company Ltd.The contract is a direct continuation of ongoing contract and is expected to create some 378 million USD in revenues. There is an option for another three year period included.

Fred Olsen Energy second quarter highlights

Drilling rig company Fred Olsen Energy ASA (OSE: FOE) reported an operating profit before depreciation of 929 million Norwegian kroner on 1 629 million revenues for second quarter of 2011. The highlight of the quarter was a six-well drilling contract for Bredford Dolphin with Lundin Norway AS, a wholly owned subsidiary of Lundin Petroleum AB (OMX: LUPE, TSX: LUP).

The company says there has been continued tender activity within all floater segments, which has globally materialized in new contracts for both mid-water and deepwater segments. Fred Olsen Energy feels that global market outlooks is positive and supported by increasing long-term demand for oil and sustainable oil prices.

Fred Olsen’s earnings per share were 8.6 NOK. The share closed up over 4% at 201.80 NOK to wrap up the week. The quarterly report in portable document format (pdf) is available by clicking here.