Italian oil services group Saipem is looking for partners for its drilling business, while it has ruled out a trade sale, the company's CEO said on April 18.
Saipem, controlled by Italian state lender CDP and oil major Eni, is seeking joint venture (JV) deals to revive growth and underpin its balance sheet after years of falling margins.
CEO Stefano Cao said in present market conditions there was no value to extract from a trade sale of Saipem’s onshore and offshore drilling businesses.
“But we are not considering this,” he said during a conference call with analysts.
“We are focusing on other options such as combinations, adding some willing shareholders. We intend to keep exposure to the business to capture the recovery which we believe is forthcoming in the next months.”
Sources told Reuters in March that Saipem was trying to lure big U.S. rivals into JV but had not secured any deals yet for stakes in drilling operations valued at up to 1.5 billion euros (US$1.7 billion).
Despite a recovery in oil prices this year, sluggish demand is still testing the outlook for oilfield service companies and is expected to trigger consolidation in an industry still recovering from the 2014 downturn in energy markets.
A potential initial public offering of Saipem’s drilling business seems unlikely for the time being but it could be considered after “a combination with other private operators,” the CEO said.
Saipem stuck to its annual guidance on April 18 as earnings in the first quarter rose, but said the industry still faced headwinds.
The contractor said its quarterly adjusted core earnings jumped 28% to 274 million euros, boosted by a rise in new orders in its core engineering and construction (E&C) business.
“We have received significant new orders that improve our visibility for 2019 despite a market context that still shows no evident signs of recovery,” Cao said.
The company said high crude price volatility and crimped spending by oil companies were likely to be features of this year.
Saipem, a market leader in subsea E&C, is looking to develop new lines of business to boost order books, including floating wind power farms and dismantling oil and gas platforms.
In the first quarter, revenue rose 12.6% to 2.16 billion euros, above a Thomson Reuters poll consensus forecast of 2.06 billion euros. It has forecast sales this year of about 9 billion euros.
($1 = 0.8883 euros)
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