US Oil Service Firms Face Hit from Venezuela Debt Restructuring
Nov 6 (Reuters) - U.S. oil service companies face hard decisions in the coming weeks on whether to continue working for Venezuela's state-run oil company PDVSA, and the prospect of hundreds of millions of dollars in write-offs for overdue bills.
The companies' services are critical for Venezuela, which is struggling with a deep economic crisis marked by shortages of food and medicine. Oil accounts for over 90 percent of the nation's export revenues.
Socialist President Nicolas Maduro on Thursday said the country plans to potentially restructure some $60 billion in bonds, widely seen as signaling a possible default that could affect other debt. New York-based investment firm Torino Capital estimates that, in addition to the bonds, Venezuela owes some $26 billion to creditors and $24 billion in commercial loans.
Oil services firms must now balance the prospect of future work in the OPEC-member South American nation against the risk of write-offs. Several have had to sharply write down the value of promissory notes received for past work in Venezuela.
Suppliers with overdue bills linked to the nation include oilfield services companies, storage facility operators, and shipping firms. All play key roles in keeping its oil flowing to world markets.
U.S.-based oilfield services provider Halliburton Co has a $727 million investment in Venezuela, including $429 million in outstanding bills, according to its most recent financial report.
Schlumberger has about $700 million at risk, including receivables and a promissory note for past work. Weatherford International has at least $158 million in outstanding bills, and Baker Hughes holds receivables and inventory valued at $100 million, according to their most recent financial reports.
PDVSA's late payments for time-chartered tankers have grown in recent months as it put commitments to bondholders ahead of suppliers, according to shippers and a PDVSA source. The company is also losing other service providers over the lack of timely payments.
PDVSA could not be reached for comment.
Reduced access to infrastructure for blending and shipping oil in large tankers from the Caribbean has contributed to PDVSA's declining crude exports, which fell to 1.47 million barrels per day (bpd) in the third quarter, 9.7 percent lower from the same period of 2016, according to Reuters data.
"They have sacrificed the company's operations to pay bondholders," the PDVSA source said.
NOTES AND PROMISES
After taking promissory notes from Venezuela earlier this year in exchange for $375 million in earlier debts, Halliburton wrote off $262 million of the notes. It is no longer seeking new work in the country, a source close to the matter said.
"We do not intend to accept further notes as payment if offered," the company said in a regulatory filing last month.
View Full Article
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
- Weatherford CEO's Rebound Plan Relies On Getting Smaller (Sep 14)
- Weatherford CEO Expects 2018 EBITDA To Nearly Double (Sep 05)
- Weatherford Posts Smaller-Than-Expected Loss On Higher Drilling (Jul 27)
Company: Baker Hughes more info
- Baker Hughes: US Drillers Add Oil Rigs For Second Week In Three (Sep 14)
- Baker Hughes: US Oil Drillers Cut Rigs For Second Week In Three (Sep 07)
- Baker Hughes: US Drillers Add Oil Rigs For The First Time In Three Weeks (Aug 31)
Company: PDVSA more info
- Documents: Venezuela Resumes Domestic Crude Exports To Cuba (Sep 13)
- Documents: Venezuela's PDVSA To Reopen Damaged Port Dock By Month's End (Sep 12)
- Venezuelan Crude Sales To US Fell In August On Port Interruptions (Sep 04)
Company: Schlumberger more info
- It Takes an Army: Women in Oil, Gas Encouraged to Mentor Others in Industry (Sep 05)
- Schlumberger CEO Warns Transport Constraints To Slow Shale Gains (Sep 04)
- Schlumberger Appoints Shale Innovator Mark Papa to Board (Aug 06)