Saipem Counting the Cost of Going Solo in Low Oil Price World

The future looked brighter when state-controlled Eni set in motion plans to cut loose Saipem in July 2014, with oil prices trading at around $110 per barrel.

Now they are close to 12-year lows under $30 a barrel, hit last month when Eni finally sold part of its 43 percent stake in Saipem to get 6.7 billion euros of gross debt off its own balance sheet and sever its ties.

As well as leaving Saipem to raise funds from its investors, that deal left it to negotiate bank loans to handle its new debt pile, using its own Baa3/BBB- credit rating and not Eni's A rating.

With crude prices showing little sign of recovery amid a glut of supply and weakening demand, analysts are concerned oil producers will cut back further on investments, hitting firms such as Saipem that run drilling rigs and lay pipelines.

On Wednesday, credit ratings agency Moody's followed rival S&P in saying it could downgrade Saipem's debt to "junk," citing the risk of project cancellations and delays in an ailing sector.

A Milan banker said any downgrade could make it tougher for Saipem, which has already announced several profit warnings and hefty cost cuts, to win new business.

In its share sale prospectus, Saipem said it might have to review forecasts set last October - which included a market recovery in 2017 - if oil prices remained under pressure.