Yesterday, I talked about contract drillers pulling the rig out from under manufacturer Rowan Companies (NYSE:RDC). Today's tidbit is quite a bit more literal.
In Rowan's case, customers were scrambling to cancel or modify orders for newbuild rigs under construction. Here, though, offshore driller Ensco (NYSE:ESV) has seen a customer physically take control of one of its jackup units.
The culprit? Venezuela's state-owned operator, PdVSA.
With the plunge in oil prices, PdVSA has been piling up the accounts payable and holding off on settling with suppliers and contractors. One figure bandied about back in December, with regard to the amount owed to firms like Schlumberger (NYSE:SLB) and Halliburton (NYSE:HAL), was $1 billion. Total accounts payable hit $7.9 billion at the end of September, according to PdVSA's financial reports, and I can only imagine that the firm's financial situation has deteriorated since then.
Ensco stopped drilling when it didn't get paid, so Venezuela took operational control of the rig in order to keep the drill bit turning. Ensco employees are monitoring the proceedings. It all sounds rather surreal.
One sign of Venezuela's desperation was the recent offer to open up exploration blocks to foreign companies. This follows on the heels of some strong-arming that saw ConocoPhillips (NYSE:COP) and ExxonMobil (NYSE:XOM) beat a retreat.
These Ensco antics are yet another sign that all is not well in the Kingdom of Chavez. Ensco only had this one rig running in the country, so it's not a terribly material piece of business, and I would prefer to see that number go to zero.
As for folks like Chevron (NYSE:CVX), who ponied up $2 million for a recent data package as a prelude to the next bidding round for exploration blocks, perhaps this event will shake them out of their complacency. Then again, PdVSA isn't the only one acting out of desperation these days.
