Following a disagreement over compensation owed for drilling services rendered, Venezuela has nationalized 11 land rigs that belonged to Tulsa-based Helmerich & Payne (NYSE:HP). Showing growth beyond Venezuela with 150 newbuild FlexRigs in the works, H&P chief comments on the nationalization of the company’s rigs.
“Reflecting on last week's forced exit from Venezuela, it is clear now that PDVSA was not interested in both sides achieving commercial terms to return our rigs to work,” said Hans Helmerich, president and CEO of H&P. “That approach only heightens concerns for our oil field service peers contemplating their future there, as it should.”
Idling its 11 land rigs located in the country, H&P refused to sign new drilling contracts with Venezuela’s state-owned PDVSA because the company had not paid for drilling services rendered in 2009. The total invoiced amount is valued at $43 million.
In the face of nationalization threats, H&P stated that it would be willing to sign a new drilling contract and put its rigs to work if PDVSA made a significant attempt to pay its past-due bill.
The Venezuelan government nationalized the land rigs, taking ownership of them last week.
“We depart with our heads held high,” Helmerich stated. “We fulfilled all of our contractual obligations, trained and employed thousands of Venezuelans and achieved an outstanding long-term safety record. The loyalty of our employees and many suppliers there will long be appreciated and remembered."
This is not the first time Venezuela has changed the rules for oil and gas companies working in the country. In 2007, Venezuelan President Hugo Chavez nationalized exploration and production projects on which major producers had invested considerable amounts of money to develop, and in 2009 the country nationalized a number of oil services companies.
In other parts of the world, H&P continues operating at full steam, announcing that the company has added another seven rigs to the newbuild line-up, bringing the number of FlexRigs under construction in the last five years to 150.
“Our future is better reflected in today's announcement of additional new builds for paying customers under long-term contract,” Helmerich added. “Ironically, almost ten years ago, PDVSA was one of our customers that saw the potential and expressed early interest in the FlexRig capabilities. However, we never sent any FlexRigs to Venezuela, and the 11 rigs that were seized last week were conventional rigs and not part of our global FlexRig fleet.”
Helmerich & Payne has a fleet of 215 land rigs in the US, 28 international land rigs (excluding the 11 rigs seized in Venezuela), and nine offshore platform rigs. Additionally, another eight newbuild FlexRigs are expected to be completed by 2011.
