Nov. 21 (Bloomberg) -- Saipem SpA, Europe's biggest oil- field services company, said it's reviewing costs to develop Saudi Arabia's Manifa oilfield, denying a report that the order was canceled. The shares slumped the most in almost 24 years.

``The contract has not been canceled at the moment,'' Milan-based Saipem said today in a statement. Saudi Aramco, Saudi Arabia's state oil company, has instructed Saipem not to hire any more contractors or suppliers until the cost evaluation is completed, it added.

Thirteen days before Saipem announced the contract on July 24, the price of oil reached a record $147.27 a barrel in New York. Since then, crude has plummeted to under $50, reducing the return on high-cost production projects. Morgan Stanley & Co. estimated this week that as many as 44 projects have been delayed or faced cuts as the world economy enters recession.

Saipem's engineering unit, Snamprogetti SpA, won the order for a $1.8 billion contract to build three so-called separation trains for natural gas and oil with a daily capacity of 900,000 barrels, the Middle East Economic Digest reported June 8. Saipem never released exact figures for the deal.

Saipem fell 2.21 euros, or 18 percent, to 10.23 euros in Milan trading, the most since at least 1985. It was also the lowest close since May 2005. The stock has lost 62 percent this year, giving the company a market value of 4.6 billion euros.

Upstreamonline.com earlier reported on its Web site that Aramco had canceled the contract with Snamprogetti.

The shares also slipped today after Cheuvreux removed Saipem from its ``European Oil Top Picks'' list.

``While we are confident about Saipem's ability to meet targets and its strong asset base, falling oil prices might have a nasty impact on Saipem's order intake in 2009,'' analyst Marco Baccaglio wrote in a note. The brokerage kept Saipem in its `Italy's Selected List.''

To contact the reporter on this story: Adam L. Freeman in Rome at afreeman5@bloomberg.net

Last Updated: November 21, 2008 12:23 EST