Shares in Italian oilfield services contractor Saipem jumped nearly 4% in early trading on Monday on media reports that Norwegian rig giant Seadrill could be interested in buying its offshore drilling division.
Such a deal, if confirmed, “would be extremely positive news” for both Saipem and parent Eni by cutting their debt levels, analysts at Mediobanca Securities were quoted as saying by Italian newspaper Milano Finanza.
It would also “bring out the hidden value” of Saipem’s core engineering & construction business, they said.
Saipem expects to report year-end turnover for its drilling business of €1.1 billion ($1.48 billion) with earnings before interest, tax, depreciation and amortisation of €590 million, while it had a contract backlog for the first nine months of $3.3 billion, according to the publication.
A Milan trader told Reuters: "The disposal could help Saipem strengthen its financial structure."
Saipem refused to comment to the news wire.
Equita analysts were quoted as saying that proceeds from Seadrill’s planned New York listing of its 74%-owned harsh-environment rig subsidiary North Atlantic Drilling Ltd could potentially be used to fund such an acquisition, citing a possible price of €3.9 billion for the Sapiem drilling division.
Cash-rich Seadrill, backed by billionaire shipping and offshore investor John Fredriksen, is currently engaged in an extensive newbuilding programme to bolster its fleet of floaters and jack-ups as it targets expansion mainly in its core ultra-deepwater segment, as well as the Arctic.
The Oslo-listed company recently put on hold plans to forge an Arctic drilling joint venture by bringing onboard a strategic partner as a major shareholder in North Atlantic.
Saipem is similarly eyeing the ultra-deep and Arctic, with a fleet including ultra-deepwater drillships Saipem 10000 and Saipem 12000 as well as the winterised semi-submersible Scarabeo 8 that has seen work in Norway’s Barents Sea.
Shares in Milan-listed Saipem were up 3.79% at €18.34 per share early on Monday, outperforming Italian blue chip index that was down 0.44%.
Seadrill’s chief financial officer Rune Magnus Lundetrae declined to comment on the reports when contacted by Upstream.