Keppel Corp: Petrobras is considering cancelling Package 2 of its giant tender for 28 ultra-deepwater drilling rigs, due to high prices. Under this package, Petrobras was likely to award either one or two semisubmersibles to 1 or 2 players, and Keppel which offered the 2nd lowest bid at US$749m for one semi-sub, was initially tipped to secure a winning bid...
Meanwhile Petrobras aims to ensure even more competitive prices for its remaining tenders. In the negotiations with EAS for an order of 7 drillships, Petrobras is targeting a price reduction of US$1.2m per unit. The latter has so far already secured a $1m discount for each of the 7 rigs. This could spell even lower margins for the rig builders.
With virtually the whole Street rating Keppel at Buy, negative price reaction could be significant if investor expectations are not met.
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