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.
- US Oil Service Firms Face Hit from Venezuela Debt Restructuring (Nov 06)
- Weatherford Names Former Halliburton CFO Its New Chief (Mar 07)
- Document: Algeria's Sonatrach Awards $180M in Oil Service Contracts (May 08)
Company: Baker Hughes more info
- Baker Hughes: US Oil Rig Count Rises For Fifth Straight Week (Feb 23)
- Baker Hughes: US Drillers Add Oil Rigs For Fourth Consecutive Week (Feb 16)
- BHGE CEO: Oil, Gas Industry Outlook 'A Lot Brighter' in 2018 (Jan 29)
Company: PDVSA more info
Operates 14 Offshore Rigs
Manages 26 Offshore Rigs
- Citgo Petroleum Slows Aruba Refinery Revamp Due To US Sanctions (Feb 21)
- Catalytic Cracker At PDVSA's Curacao Refinery Halted After Fire (Feb 16)
- Algeria Sends More Oil To Cuba As Venezuelan Supplies Fall (Jan 10)
Company: Schlumberger more info
- Egypt Says Signs Seismic Survey Deal With Schlumberger (Feb 14)
- Halliburton Takes Fracking Fight From Oil Field to Patent Office (Feb 06)
- Schlumberger Profit Beats, Predicts Strong 2018 For Shale (Jan 19)