Scorpion scraps plan to build rig for Petrobras
Scorpion Offshore Ltd., a drilling service company, cancelled plans to build a $ 700 mm rig that is to be leased for
$ 485,000 a day by Brazil's state oil company, Petroleo Brasileiro, after it was unable to secure financing.
The financing failure forced Scorpion to pull the contract to build the ship at Singapore's Keppel FELS Shipyard to
transport the rig, Scorpion's Chief Executive Officer Jon Cole said on Jan. 13. Petrobras agreed in July to lease the
rig from Scorpion.
A worldwide credit crunch and a 62 % plunge in oil prices since a record $ 147.27 a barrel in July is making it tough
for oil service companies to secure loans, Cole said. Transocean, the world's largest offshore oil driller, disclosed
on Jan. 12 the cancellation of a $ 550,000-a-day rig lease and said a second vessel was idled after the client ran
out of cash.
"This is a function of finance not being available," Cole said from his Houston office. "It was a very good contract.
This is not a Scorpion problem, it's an industry-wide problem, finance has dried up."
Rio de Janeiro-based Petrobras, through a press office spokesman, said the company's executives have no comment
because the dispute is between third parties. The spokesman is not allowed to be named under company rules.
"Petrobras has an enormous work program going forward and they will have to replace this capacity some way or
another," Cole said from his office in Houston.
The rig Hamilton, Bermuda-based Scorpion planned to build would be one of the most advanced in the world. It would
have been able to drill as much as 7,000 meters (22,966 feet) below the ocean floor and in waters 3,000 meters
deep.
Scorpion's stock trades in Norway. The company is run from offices in Houston.
