I'm not reluctant to note that, "It's deja vu all over again."
In this case, I'm referring to the Obama administration's new decision to reopen the Gulf of Mexico to deepwater drilling. As you know, a tragic series of events began in April, when Transocean's Deepwater Horizon drilling rig -- which was being operated by BP -- exploded, burned, and sank in mile-deep Gulf water, taking 11 lives with it and setting off a horrendous oil spill. As a consequence, the administration in May imposed a six-month deepwater drilling moratorium in the Gulf.
That stoppage was lifted in June, however, by U.S. District Judge Martin Feldman, only to have the administration immediately impose yet another ban. The second iteration of the deepwater cessation was technically removed in October. Interior Secretary Ken Salazar commented at the time: "The policy position that we are articulating today is that we are open for business." Nevertheless, no new permits for deepwater wells have subsequently been granted.
Now, however, 13 companies will apparently be allowed to return to work on Gulf projects that were approved and under way at the time of the first moratorium. The affected companies include ATP Oil & Gas (Nasdaq: ATPG), Cobalt International Energy (NYSE: CIE), and Hess (NYSE: HES). As is appropriate, their 16 resumed projects will be required to adhere to the numerous new safety standards that have been put in place following the April tragedy.
The administration's latest move follows intensifying criticism from politicians and those in the industry most affected by the drilling stoppage. Now, as in October, the industry's enthusiasm is being somewhat bridled, however, by the as-yet unknown specifics of the change. Indeed, as Todd Hornbeck, CEO of Louisiana's Hornbeck Offshore Services, said then, "The devil is in the details, as they say, and the industry hasn't seen the final requirements for what we would have to do to be able to actually get a permit issued."
From my perspective, the administration has taken a giant step in the right direction, one that will benefit energy investments and ultimately our own domestic energy position.
Nevertheless, while it won't be among the 13 companies returning to their Gulf toils, I continue to favor ExxonMobil (NYSE: XOM) for, among other things, its geographic diversity, technological strength, and big-enchilada status among U.S. gas producers.
