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| Aban may lose its drill ship contract |
| Abhineet Kumar / Mumbai Sep 09, 2009, 00:23 IST |
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Aban Offshore, the Chennai-based drilling firm, is likely to lose a contract for its drill ship ‘Aban Abraham’ for deployment at an offshore field in Ghana, Africa, for developing the Jubilee Field. The 33-year-old drill ship was contracted to Kosmos Energy for the field’s development from September 1 to October 21 at a rate of $300,000 a day (about Rs 14.6 crore a day).
The loss of the contract would make a dent of about Rs 743.5 crore in the current financial year’s revenues. The company had reported net sales of Rs 3,050 core for 2008-09. Its profit for the period was Rs 540 crore.
“The drill ship had developed some technical problem about four months ago and was under repair and maintenance,” an oil company official familiar with the development said. “The delay in its deployment made Kosmos look for an alternative,” he added.
Aban may have to compensate Kosmos for not making the drill ship available in time. An email sent to the company did not get any response.
About two weeks ago, the company announced the deployment of four of its seven idle jack up rigs — three in West Asia for three years and one in Latin America for over 25 months. Revenue from the West Asian contract is expected to be Rs 2,925 crore and the contract for Latin America would fetch the company Rs 446 crore.
Aban Offshore, which began as a comparatively small manufacturer of pipelines for oil refineries and fertiliser plants, grew to its present size through a series of expansion plans. Explorations at high costs became unviable when Brent, the benchmark crude oil price, crumbled from a high of over $145 per barrel in July 2008 to just $34 per barrel by end-December in the same year due to the economic slowdown.
This downturn affected the demand for rigs of the company. Aban Offshore saw as many as seven out of the total 20 rigs becoming idle, weakening its capability to repay the loan. However, oil prices have been gradually recovering. As of Tuesday, Brent was priced at $68.2 per barrel. The recovery in oil prices has helped the company deploy some of its idle assets.
The company has a debt of Rs 13,000 crore on its books and it is negotiating with its lenders to increase the repayment period for about Rs 8,000 crore of the loan to 10 years from 5-6 years now.
The stock of the company settled 1 per cent lower at Rs 1,572 a share at close of Tuesday’s trade on the Bombay Stock Exchange.
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