Two weeks ago, we heard how Noble
A mythic muddle
We'll begin with Hercules Offshore
Hercules provided this handy bit of background during its conference call: "Prior to the new regulatory requirements, there were a total of 99 permits approved between January through May of this year. Since then there's only been 19 new permits approved." Only two permits have been issued since the release of a second set of regulations requiring a "worst-case discharge scenario" in the event of another well blowout. Eight new wells, plus six sidetracks, are still pending approval, according to the BOEMRE (the agency formerly known as the Minerals Management Service and now known as the Bureau of Ocean Energy Management Regulation and Enforcement).
Industrywide, there are 33 jackup rigs under contract in the Gulf of Mexico. Hercules tells us that 19 are set to come off contract by the end of next month, so the new permitting process needs to get streamlined, pronto. Otherwise, it'll be the Dead Sea out there.
The true titan
Next to report was Rowan Companies
That said, Rowan's offshore business is nothing like that of Hercules. This firm has a seriously high-powered fleet, with only three conventional rigs. The rest are "high-spec" jackups, capable of more demanding work. Rowan's fleet utilization in the quarter was 75%, which is a very strong number, given the soggy conditions of the global jackup market. Hercules' reported utilization was even higher, but that's because none of the firm's many, many nonmarketed rigs figure into the calculation.
The most difficult future to divine
From strength back to struggle, we turn to Seahawk Drilling
In the quarter, cash and equivalents dropped from $73.4 million to $47.9 million. I realize that Seahawk is now trading at a discount to the point at which I said I would be comfortable swooping on the stock, but that was before the BP
That is, of course, until things turn around in the shallow Gulf. Seahawk, more than any other company I track, really needs those new well permits to start flowing. I am cautiously optimistic that the situation will improve over the next two to three months. Seahawk probably has the balance sheet strength to ride out this drilling depression for the balance of 2010, but I would expect the firm to tap the equity or debt markets before too long. Each time the company is forced to do so, it will come to look more like Hercules Offshore. That's a future to be avoided at all costs.