Seadrill Advances on Petrobras Rig Extension Report: Oslo Mover

Seadrill Ltd. (SDRL), the second-largest owner of ultra-deepwater drilling rigs, gained the most in three months in Oslo after a report that Brazil’s Petroleo Brasileiro SA will resume talks with contractors about extending charters.

Shares in Bermuda-based Seadrill gained as much 2.8 percent to a record 261.80 kroner, the biggest intraday jump since May 6, and traded 1.4 percent higher as of 10:10 a.m. in the Norwegian capital. That makes Seadrill the biggest gainer on the Bloomberg EMEA Oil and Gas Index today.

Citigroup Inc. raised its price estimate to 300 kroner and maintained its key buy rating on Seadrill in a research note.

Petrobras will restart negotiations on the extension of contracts for six ultra-deepwater rigs, including two belonging to Seadrill, two months after unexpectedly breaking off talks, Upstream said, citing unidentified people. The talks have stalled on rates, with operators seeking more than $600,000 a day and Petrobras trying to keep them lower, the oil industry website reported.

If Petrobras is to meet its targets for drilling production, development and exploration wells, it will need to extend the agreements for all six rigs, Pareto Securities AS said in an e-mail. “We believe Petrobras will require all the units regardless of whether domestic-built units should actually be delivered on time,” the broker said.

Seadrill, the largest owner of ultra-deepwater drilling rigs after Switzerland’s Transocean Ltd. (RIG), is expanding its fleet in anticipation of rising demand from energy companies that are extending the search for oil and gas reserves into deeper and harder-to-access regions.

Fleet Expansion

The company on July 31 said it had ordered two jack-up drilling rigs from Dalian Shipbuilding Industry Co. in China at a combined cost of about $460 million. It’s also seeking to buy Arendal, Norway-based Sevan Drilling ASA (SEVDR) to take control of its two operational deepwater rigs and two more that are under construction.

Seadrill, controlled by billionaire John Fredriksen, has gained 27 percent in Oslo trading this year, giving it a market value of 121.2 billion kroner ($20 billion).

The company currently owns 62 units including drill-ships, jack-ups, semi-submersible rigs and tender rigs, with another 24 being built or having been ordered. An ultra-deepwater rig can drill for oil and gas deposits in water depths of 7,500 feet (2,300 meters) to 12,000 feet.

To contact the reporter on this story: Alastair Reed in Oslo on at areed12@bloomberg.net

To contact the editor responsible for this story: Christian Wienberg at cwienberg@bloomberg.net

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