Petrobras is near deals on 15 to 17 rigs

HOUSTON: Brazil's state oil company Petrobras is close to issuing letters of intent for as many as 17 new offshore drilling rigs, US-based analysts said.

"We are hearing speculation that Petrobras will announce letters of intent for as many as 15 to 17 newbuild drillships and semisubmersibles before the end of this week," Bill Herbert, an analyst with Simmons & Co Int'l, wrote on Friday, citing industry sources.

All of the letters will likely not end up as final contracts, but Petrobras is casting a very wide net to secure what should ultimately be an additional eight to 10 rigs, Herbert said.

Letters of intent are preliminary agreements issued before a final contract is awarded.

Most of the Petrobras business will likely go to smaller Brazilian companies because very few of the 35 bids received by Petrobras were placed by large U.S. contractors, Judson Bailey, oilfield services analyst with Jefferies & Co, said in a note on Thursday.

A representative for Petrobras said the oil company was analyzing rig needs, but currently there were no firm orders.

This week, investment bank UBS estimated that the Tupi and Carioca finds off Brazil would need about $600 billion to develop, a massive windfall for oilfield services companies all over the world.

The head of Brazil's National Petroleum Agency (ANP) last month cited data from Petrobras putting the Carioca field reserves at 33 billion barrels of oil equivalent.

If confirmed, it would be the largest find in the world in the past 30 years, although more drilling is needed to establish reservoir volumes, Petrobras has said.

In November, Petrobras estimated recoverable reserves at its subsalt Tupi find in the Santos basin at between five billion and eight billion barrels.

The country's total oil reserves, not including Tupi, are around 12 billion barrels.

Last month, Norway's SeaDrill Ltd said it won deepwater rig contracts worth up to $4.1 billion from Petrobras. And Noble Corp, based in Sugar Land, Texas, said in March it signed deals possibly worth $4 billion with the Brazilian energy company.