Baker Hughes Said to Be Favorite for Main Petrobras Drilling Job

Aug 21, 2014 4:21 pm ET

Aug. 21 (Bloomberg) -- Baker Hughes Inc. placed the best bid for the main contract in Petroleo Brasileiro SA’s $1.5 billion to $2 billion offshore drilling program, said two people with direct knowledge of the tender.

The contract represents half the drilling work being offered by the world’s biggest ultra-deepwater producer over the next four years, the people said, asking not to be named because the information hasn’t been made public.

Schlumberger Ltd. offered the lowest cost for a second package representing 30 percent of offshore wells and Halliburton Co. placed the cheapest bid for the remaining 20 percent of drilling work, they said. Baker Hughes will charge Petrobras less per well compared with the other two drilling packages that have smaller volumes of work, the people said.

Petrobras, based in Rio de Janeiro, invited bids for fresh contracts after a reduction in the company’s drilling fleet eroded suppliers’ margins, the people said. Halliburton had the 50 percent package under the previous contract, they said. The value of the three new contracts is subject to change depending on levels of activity.

Schlumberger declined to comment on the results of the tender in an e-mailed response. Baker Hughes and Petrobras didn’t immediately offer comments when contracted by e-mail.

“Tenders were submitted last week but there haven’t been any official awards made at this point,” Emily Mir, a spokeswoman at Halliburton, said in an e-mailed response.

Suppliers to Brazil’s oil industry have cut staff over the past year to adjust to lower-than-expected demand as Petrobras seeks to contain costs. The company trimmed its five-year business plan to $220.6 billion earlier this year.

--With assistance from David Wethe in Houston.