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Sevan Drilling Declines on Brazil Oil-Rig Fault: Oslo Mover

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Sept. 24 (Bloomberg) -- Sevan Drilling ASA, a Norwegian operator of deepwater drilling rigs, fell the most in almost a year in Oslo trading after reporting a valve fault at its Brazilian operations.

Sevan slumped as much as 11 percent, the biggest intraday decline since Oct. 4, and traded down 8.2 percent at 5.86 kroner as of 12:27 p.m. local time. It was the third-biggest loser on the Oslo Stock Exchange’s All-Share Index.

Sevan had “problems” while testing the control system of a blowout preventer on its Sevan Brasil vessel, and will bring the valve to the surface to investigate and make repairs, it said today in a statement. The equipment is used to cope with erratic pressure and flow when pumping from an underwater field.

“There should be at least seven days of downtime even if no issues are discovered,” Pareto Securities ASA said in a note to clients. While this shouldn’t affect third-quarter earnings, there may be “downside” to fourth-quarter numbers, it said.

Sevan Drilling supplies rigs for use in deep water, increasingly the focus of global exploration as companies extend the search for oil to benefit from rising energy prices. Sevan Brasil, an ultra-deepwater rig that started its first well in late August, is contracted to Petroleo Brasileiro SA on a six-year deal at $405,000 a day.

Sevan Drilling has gained 16 percent this year in Oslo. The shares lost as much as 4.6 percent on Aug. 14 after the Arendal-based company said it temporarily breached one of its bank loan covenants, citing costs associated with the mobilization of the Sevan Brasil rig.

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

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

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