The Real Winners of the Brazil Oil Boom

The recent Libra field auctions show that Petrobras  (NYSE: PBR  ) and the Brazilian government are serious about trying to get this massive field into the development stages. It is estimated that Petrobras and its partners will spend $184 billion over the life of the project. This means one thing: Halliburton (NYSE: HAL  ) , Baker Hughes (NYSE: BHI  ) , and Seadrill (NYSE: SDRL  ) are very happy companies.

Why these three in particular? Both Halliburton and Baker Hughes have large market shares in the region with multiple-year service contracts already in place. Baker Hughes operates more than 50% of the well stimulation vessels in the offshore market, and Halliburton's eight-year development contracts have plenty of upsell opportunities as new technology develops. To find out why Seadrill's massive rig construction has a lot to do with developments in the Libra field, tune into the video below with Fool.com contributors Tyler Crowe and Aimee Duffy.

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  • Report this Comment On October 29, 2013, at 9:58 AM, Heidikitty wrote:

    Wish we could see a video with this CEO as I am long on SDRL. Looking forward to 2015 and beyond with this company.

  • Report this Comment On November 03, 2013, at 12:34 PM, grouchosez wrote:

    Fellow Fool Tom Jacobs came out with a totally different perspective on offshore drilling, saying to avoid the offshore drillers completely, based on the argument that weakened demand for crude oil in China coupled with increased domestic supply from onshore fracking operations in the U.S. would have a negative impact on crude oil prices. -- However, it seems Jacobs might be a bit too far ahead of the curve, as deep water rig utilization for large scale offshore E&P projects is critical to the development of large fields such as Libra. Petrobras is very unlikely to cancel development of this field due to a small drop in crude oil prices, and it would take a very significant drop in crude prices for PBR (or any other major operator) to scale back development plans to the point that deep water rig utilization would be significantly affected over the next several years. However, once production from Libra and other large fields outside the U.S. starts to come on-line, the story may tilt more towards Jacobs viewpoint, but that will take time.

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