Seadrill a 'frontrunner' for Mexico tenders

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Wednesday, November 26, 2014

Offshore driller Seadrill says it is a "frontrunner" for new contracts in Mexico as the country ends its 75-year-old state oil and gas monopoly.

In a third-quarter results report, the Bermuda-based firm cited rising demand in Mexico and Brazil as key to the long-term recovery of a sector hit by plummeting oil prices.

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"In Mexico, the energy reform process continues to progress and oil companies are beginning to consider budgets allocated to the region," Seadrill said.

"[We] remain a frontrunner for tenders in the region with the establishment of our joint venture, SeaMex, and having operated the West Pegasus [semi-submersible rig] in the region for nearly three years."

Demand for drilling services in Mexico is set to be sparked by the country's first licensing round for exploration and production blocks in the first half of next year.

BRAZIL BOOST

In Brazil, Seadrill is eyeing additional long-term deals with federal energy major Petrobras to drill for hydrocarbons under the Atlantic salt layer.

"Further tenders from Petrobras and international oil companies have already been released and more are anticipated," Seadrill said.

Two Libra field extension programs using the West Tellus and West Carina drillships have already been completed, the company added.

NO MORE 'EASY OIL'

Seadrill reported Q3 net income of US$149mn, down from US$286mn in the year-ago period.

Operating revenues rose to US$1.29bn from US$1.28bn while operating expenses climbed to US$832mn from US$809mn a year earlier.

Seadrill said earnings had been hit by a 23% – or US$24/b – fall in the Brent spot price since August.

"The company believes the long term fundamentals of our industry remain intact [despite] the fact that the days of easy, low cost oil are over and reserves required to meet long term demand growth are still to be found in the deep and ultra-deepwater regions," Seadrill said.

"As mentioned by a number of major oil companies, these reserves are well positioned on the cost of supply curve and can be expected to be produced even at today's oil prices."