Goldman Sachs, citing an article Tuesday in offshore & marine industry journal Upstream, says Petrobras (PBR) may cancel the two rig package within its giant tender, due to higher-than-expected prices, in which Keppel (BN4.SG) is widely considered a frontrunner. 

GS says the news “may appear slightly negative for Keppel, but this does not impact our estimates as we have not factored in any PBR-related order wins for Keppel.” 

 

Instead, the houses sees this as positive for the O&M sector, “as PBR could move to contract existing rigs to fulfill its drilling needs. This would drive rig utilization up, which could potentially stimulate non-PBR newbuild orders.” 

 

It adds, positive feedback from U.S. drillers further supports its view that a deepwater recovery is going to happen soon. GS expects the market to look past the slightly negative PBR news for Keppel, rated Buy, and focus on the industry’s strong underlying fundamentals. The house’s top O&M pick is STX OSV (MS7.SG), rated Buy. Keppel is up 1.2% at $11.58.