(Bloomberg) -- Billionaire Paolo Rocca has a new way of keeping his cash-starved oil company clients drilling: putting up funding as bank credit tightens.
Rocca’s Tenaris SA, the biggest manufacturer of seamless steel tubes for the oil industry, will use its own cash to support clients next year after crude prices collapsed, the Argentine-Italian entrepreneur said Thursday on a quarterly conference call. Tenaris is prepared to take a hit on its net cash holdings as a result.
“We are monitoring the financial health of our customers and we are providing to many of our big customers an extension in payment conditions that is really helping in this very complicated environment in which part of the credit lending has been cut by banks,” Chief Financial Officer Edgardo Carlos said on the same call.
Crude’s 40 percent plunge in the past year is squeezing margins and triggering billions of dollars of writedowns among producers. Even so, Rocca expects drilling levels to improve in the U.S. and Kuwait next year. Drilling in Latin America probably will fall, he said.
Tenaris net cash position rose to $2.1 billion in the third quarter. Little changed on Thursday, the company’s shares have fallen 6 percent his year compared with the Bloomberg Energy Subindex’s 25 percent decline.
“We will use part of our cash to support our clients, to support some of their plans,” Rocca said.
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Copyright 2016 Bloomberg News.
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