Were GulfMark's Earnings on the Mark?

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This article is part of our Rising Star Portfolios series.

As volatile as oil can be, I can't resist having some exposure to it in my Rising Stars portfolio. When I recommended GulfMark Offshore (NYSE: GLF  ) last month, part of the thesis was based on huge amounts of global spending coming down the pipe from the big boys like ExxonMobil (NYSE: XOM  ) and Chevron (NYSE: CVX  ) .

Last week, GulfMark announced fourth-quarter earnings, which drew a positive reaction from the market. Interestingly enough, though, consolidated revenue was actually down 7% from the previous quarter, and operating income fell 15% based on lower activity in the Gulf of Mexico and southeast Asia. Let's take a look at each of the company's three geographic segments to dig in a little deeper:

Go north
Revenue in the North Sea region was down about 1% from last quarter, mostly based on the sale of the North Traveller vessel, which was responsible for $1.8 million in revenue for the previous quarter. Management sees a lot of potential in the area, though, as vessel options continue to be picked up by companies in the region. Considering the North Sea contributed more than 40% of overall revenues for the year, it will be an important region for the company going forward.

Now go south to Asia
Southeast Asia may be the smallest of the three segments, but it still pulls its weight. Revenue for the quarter was down 11% primarily due to lower utilization, but this was because of additional downtime on two of the region's most established vessels. Still, with an operating margin of more than 60% for the quarter, southeast Asia is a dependable contributor to the bottom line.

Only in America
While the Gulf spill may be contained, its effects will be long felt. Revenue for the Americas segment fell 11% on the whole, based mostly on completion of the spill relief work and the fact that future activity in the Gulf is still nebulous at best. Utilization rates were high for the rest of the segment, but until we have more clarity on the spill's effects on future exploration, the company is prepared for limited activity in the region.

Here's to the future?
CEO Bruce Streeter made no bones about it; while 2010 was a good year, it was a tough year. And management doesn't anticipate any increase in activity in the Gulf for at least the first quarter of 2011, probably longer. This reiterates the importance of GulfMark's international operations as the situation in the Gulf continues to work itself out. To be sure, Streeter thinks it's a matter of when, not if, Gulf activity picks back up; it's just impossible to tell how long it will be.

Earning the bottom line
Until then, investors can take solace in the fact that GulfMark has a significant international presence. In 2010 the company generated 60% of revenue from the North Sea and southeastern Asia segments. And remember, there is still activity in the Americas segment; just not as much with the Gulf hanging out in the twilight zone. With contract cover up 11% from last quarter and utilization rates on the rise, it looks like 2011 should be a busier year for GulfMark Offshore.

This article is part of our Rising Star Portfolios series, where we give some of our most promising stock analysts cold, hard cash to manage on the Fool's behalf. We'd like you to track our performance and benefit from these real-money, real-time free stock picks. Click here to see all of our Rising Star analysts (and their portfolios).

Stock Advisor analyst Jason Moser owns no shares of any companies mentioned. You can follow him on Twitter. Chevron is a Motley Fool Income Investor selection. The Fool owns shares of ExxonMobil and GulfMark Offshore. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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