Eurasia Drilling will move 80 percent of the rigs currently hired by Rosneft to other clients this year, according to a statement today from the Moscow-based company. The remaining 20 percent will continue to work for Rosneft, Russia’s largest oil producer.
State-run Rosneft is seeking to develop its own services arm and cut costs for drilling, bringing it into competition with Eurasia. Rosneft has grown to account for about 40 percent the Russian oil production after it bought Russia’s third-largest producer, TNK-BP, last year.
“2014 is shaping up to be a year of consolidation as we adjust our client mix and face the business risk environment in the coming months,” Chief Executive Officer Alexander Djaparidze said in the statement.
Eurasia expects to “increase significantly” its activity with OAO Lukoil (LKOD), its main customer and Russia’s second-largest producer, and OAO Gazprom (OGZD) Neft as the Rosneft drilling volumes decline, the company said. The company sees growth returning in 2015 and beyond, according to the statement.
Revenue rose 8 percent to $3.49 billion last year as net income rose 13 percent to $432 million, Eurasia said. The share of horizontal drilling in its portfolio will grow by 15 percent in 2014.
Russia’s ruble has weakened to 35.598 to the dollar from 32.835 on Dec. 30.
To contact the reporter on this story: Stephen Bierman in Moscow at email@example.com