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Superior Energy Equipment Seized by PDVSA in Venezuela

Petroleos de Venezuela SA, the state oil company, seized about $1 million worth of equipment from Superior Energy Services Inc. (SPN), the Houston-based company said.

PDVSA expropriated two hydraulic units that were idled after the Caracas-based company missed payments, Greg Rosenstein, head of corporate development, said by phone from New Orleans. The units operated in eastern Venezuela’s Anzoategui state, Associated Press reported Nov. 1.

The move follows comments by Oil Minister Rafael Ramirez on Sept. 11 that private companies unwilling to work with PDVSA on increasing production capacity should leave the country. Superior has operated in Venezuela for 15 years.

“We were surprised by the takeover as we have had a cordial relationship with PDVSA,” Rosenstein says. “We continue to work with PDVSA and the Venezuelan authorities and look to resolve this issue soon.”

The so-called snubbing units have a combined value of about $1 million and Superior’s total assets in Venezuela have a combined book value of about $2 million, Rosenstein said. A PDVSA official, who isn’t an authorized spokesperson, didn’t respond to phone calls seeking comment on the rigs.

Superior’s shares rose 2.8 percent to $27.84 at 2:40 p.m. in New York.

Schlumberger Accord

Venezuela’s oil industry generates 95 percent of the country’s foreign currency earnings, said Ramirez, who also serves as PDVSA’s chairman.

Under President Hugo Chavez, who died of cancer in March, Venezuela initiated a nationalization process, seizing assets from companies including Exxon Mobil Corp. (XOM) and ConocoPhillips. (COP)

Schlumberger Ltd. (SLB), the world’s largest oil-services company, said in March it would reduce work in Venezuela because of mounting overdue payments from PDVSA. Schlumberger subsequently reached an agreement and announced on May 24 that it would provide a $1 billion rolling credit for a joint venture in Venezuela.

Venezuela’s Orinoco heavy-oil belt is home to the world’s largest accumulation of heavy and extra-heavy oil. Venezuela, which is producing about 3 million barrels a day, according to Ramirez, expects to reach 4 million barrels by the end of 2014.

To contact the reporter on this story: Pietro D. Pitts in Caracas at ppitts2@bloomberg.net

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

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