Seven rigs to be tendered out by early third quarter: The news article reported that Petrobras is finalizing a tender of seven rigs by early 3rd quarter. This is on the high end of the 5-8 rigs which was anticipated in Asia.
Ownership of the rigs by Petrobras? The news article indicates that Petrobras is likely to be the owner of the rigs (of at least the initial seven rigs). Given that in the recent past news articles (source: Upstream) have reported that all 28 "new-build" rigs for Petrobras were likely to be leased, this new “ownership structure” could bring in the ‘hesitant' yard owners to come in and set up Brazil-based yards to construct the rigs in the country itself and meet local content needs. Bulk packaged contracts or long term charters could act as an additional incentive. Moreover, Petrobras is likely considering the option of ownership to utilize PBR’s bargaining strengths to achieve overall reduction in equipment costs.

Petrobras to test market for parallel tender for up to four charter rigs which are also to be built in Brazil: It remains unclear from the news report whether the additional four rigs (for chartering) are over and above the 28 “new-build” deepwater rigs. While in recent weeks we have seen news flow (source: Upstream) of PBR needing to charter additional 4 rigs those were not to be new-builds. If these four rigs are over and above the 28 rigs, that would be upside surprise to PBR’s rig requirements.

28 rigs probably to be divided equally between semi-submersibles and drillships: This would be a clear positive for the Singaporean yards especially given the previous tender of 12 rigs wherein only four rigs were semi-submersibles. We see this as major news especially given thatour recent discussions with our Petrobras analyst, Sergio Torres, indicated that no mix was detailed by the company.

Keppel Corp relatively better positioned than Sembcorp Marine: Keppel Corp is relatively better positioned than Sembcorp Marine to win the Petrobras rig tenders given its ownership of BrasFELS as well as potential 70% stake in RioGrande yard (it has been identified to construct the eight hulls of PBR's FPSO program). On the other hand, SMM has no physical ownership of any Brazilian yard yet although it has a partnership with MacLaren Yard and is considering an investment in a yard in the state of Espirito Santo.