OSX Tumbles on Petrobras’s Ocean Rig Cancellation: Rio Mover

OSX Brasil SA (OSXB3), the shipbuilder controlled by billionaire Eike Batista, fell to a record low after Petroleo Brasileiro SA (PETR4) canceled a contract for five drillships it was expected to build.

OSX, based in Rio de Janeiro, fell 6.4 percent to 8.99 reais in Sao Paulo, the lowest since it started trading in 2010. Brazil’s benchmark stock index fell 0.7 percent.

Petrobras, as the biggest producer in deep waters is known, canceled plans to charter five drillships from Ocean Rig UDW Inc (ORIG) 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 (BBDC4), 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 declined to comment in an e-mail.

To contact the reporter on this story: Peter Millard in Rio de Janeiro at pmillard1@bloomberg.net

To contact the editor responsible for this story: James Attwood at jattwood3@bloomberg.net