by Raúl Gallegos
On the Brink
Troubled Brazilian oil services company Lupatech may have the support of the BNDES and a backlog of orders, but can it survive in an increasingly
Brazil is the toast of the global oil industry. A string of
massive oil discoveries over the past five years and generous
capital spending by Petrobras is attracting top oil service
companies in droves.
But not all is well in the new oil frontier. Petrobras is
missing its production targets and its project execution is
falling behind schedule. The delays are hurting suppliers and
have left Brazil's leading oil services company, Lupatech, on
the brink of bankruptcy.
Lupatech, an energy valve manufacturer, is the poster child
for the dangers of growing too fast and too soon in the
Brazilian oil business. Encouraged by Brazil's large, offshore
finds in 2007, the company borrowed heavily and embarked on a
string of 17 acquisitions that left it too weak to sustain the
2008 oil price drop and the resulting slowdown.
The company is now undergoing the equivalent of...
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