The action in the Gulf of Mexico accelerated on Tuesday. I'm not referring to the oil gushing from a blown out well a mile below the surface. That's been occurring virtually unabated since a rig owned by Transocean (NYSE: RIG) and operated by BP (NYSE: BP) exploded, burned, and sank in April.
Rather, I'm pointing to the Obama administration's effort to invoke a six-month moratorium on drilling in Gulf water below 500 feet. That ban -- and the industry's effort to prevent it -- has moved to the courts, where Martin Feldman, a U.S. federal judge in New Orleans, on Tuesday issued a preliminary injunction halting it. The judge's decision stemmed from a lawsuit filed by crewboat operator Hornbeck Offshore (NYSE: HOS). Another suit filed by deepwater driller Diamond Offshore (NYSE: DO) is being heard in Houston.
In his ruling, Judge Feldman said that the administration had failed to justify a blanket deepwater suspension. He also wrote that the halt to drilling, "… seems to assume that because one rig failed and although no one yet fully knows why, all companies and rigs drilling new wells over 500 feet also universally present an imminent danger." As soon as the decision was announced, the administration said it would immediately appeal.
But since we are all in the dark about the ultimate decision by the courts -- which could take months -- it's difficult to know the optimum way for Fools to maintain a presence in energy. One way is through the larger oilfield services companies, which will offer increased geographic flexibility should a moratorium occur.
Take the biggest player, Schlumberger (NYSE: SLB), for instance. About 3.5% of its Oilfield Services revenues are derived from Gulf projects, while its smaller WesternGeco segment garners only about 1.8% of its revenues there.
At the same time, the next two largest members of the group, Halliburton (NYSE: HAL) and Baker Hughes (NYSE: BHI), have said that the deepwater Gulf provides 8% and 4% of their revenues, respectively. Prior to the judge's decision, both were already moving employees to other locations. It'll be significant to note which course they take in light of the newly-rendered decision.
All in all, my consistent stance remains that shares of Schlumberger, if not already in your portfolio, find a place towards the top of your energy watch list. Given the company's size and geographic diversity, I'm comfortable that it is especially capable of weathering a moratorium, should one occur.
