Billionaire Rocca Sees Oilfield Supply M&A as Prices RecoverBy and
Energy unit preparing to invest ‘substantially’ in Argentina
Pipe maker has best debt-to-Ebitda ratio among global peers
The billionaire owner of Tenaris SA, the world’s biggest maker of seamless steel tubes for oil drillers, sees scope for consolidation in the industry with drilling activity and oil prices set to recover.
The Luxembourg-based company’s ability to gobble up more assets and companies that have been pummeled by crude’s collapse and a slump in drilling activity would be somewhat restricted by antitrust limits, Chairman Paolo Rocca said in an interview Tuesday with Bloomberg Television.
Even so, “if you talk about Tenaris, I think there are challenges in the world but there are also areas in which that consolidation will be possible,” the Milan-born 63-year-old said.
Tenaris has a much lower debt-to-capital ratio than the average among industry peers and the best ratio of net debt to earnings before interest, taxes, depreciation and amortization. Rocca’s $7.5 billion net worth makes him Italy’s third-richest person, according to the Bloomberg Billionaires Index.
Given Tenaris supplies tubes to drillers, the company is in a privileged position to gauge the health of the oil industry. Rocca said the worst for crude may be over.
“We’ll see a recovery because production is going down and consumption is steadily going up,” he said. “Sooner or later the balance will drive an increasing price. It could be during 2017. The level that we are now is not very far from the bottom.”
The Rocca family’s Argentina-based industrial conglomerate, Techint, is also engaged in engineering and construction and oil and gas exploration. The group is preparing to invest “substantially” in Argentina, where Rocca sees the giant Vaca Muerta shale formation as a game changer.
“What we can do in Vaca Muerta is extraordinary,” Rocca said, adding that the group plans to pump in billions of dollars once the government finalizes the regulatory framework.
Rocca’s group also controls Latin American steelmaker Ternium SA and is part of the controlling group in Brazilian steelmaker Usiminas.
Tenaris shares fell 2.7 percent in New York Tuesday as West Texas Intermediate crude dropped below $45 a barrel after the International Energy Agency predicted a glut to persist into 2017. In January, oil reached 12-year lows of about $33. Tenaris is up 9.4 percent this year.
— With assistance by Andrew Willis