Aban Offshore inks $494-mn deal with Petrobras

CHENNAI: Aban Offshore, India's largest offshore drilling and oil-field services provider, has won a half-a-billion-dollar contract from Brazilian energy giant Petrobras for the deployment of its drillship Aban Abraham offshore Brazil for five years.

The estimated revenue from the deployment is about $494 million (approximately Rs 2,285 crore) plus a potential 3.85% performance bonus. The deployment is likely to commence during the fourth quarter of this calendar year. An earlier contract of Aban Abraham worked out to $3,25,000/day, including a potential 3.85% performance bonus.

Analysts see this announcement as a positive development for the debt-laden company as it improves earnings visibility and it’s expected to contribute around 12% of the total revenue. Brokerage firm Dolat Capital reacted to the news by changing its recommendation from 'sell to accumulate'.

“We expect that news relating to deployment of one idle asset ( Deep Venture) would be announced by the end of December 2010. It may be a positive trigger for the company,” Dolat Capital Market research analyst Kapil Yadav Research said. Aban Offshore suffered a massive setback in May this year when its gas platform Aban Pearl sunk off the coast of Venezuela. This was one of Aban’s biggest cash cow earning $358,000 or about a crore and a half rupees a day. The company later managed to get its re-insurers agree to settle a significant portion of $235-million insurance claim for its semi-submersible rig Aban Pearl. The company has a debt burden of at least $3 billion.

India Infoline said in a report three months back that Aban Offshore has a commitment to pay $356 million worth of debt in FY11 and $642 million in FY12.