There are countless profitable niches to fill in the global energy trade. You can provide fluids and services like Baker Hughes (NYSE:BHI), drill wells like Transocean (NYSE:RIG), make tubular steel products like Maverick (NYSE:MVK), or provide charter boat services like Tidewater (NYSE:TDW).
On the plus side, revenue was once again strong in Tidewater's latest quarter -- up 37% as pricing (dayrates) and volume (utilization) both stayed strong. In particular, the company seems to be having little trouble keeping its deepwater and crew/utility boats busy, though the offshore tug business was comparatively a bit weaker.
Unfortunately, operating expenses came in higher than originally forecast, which ultimately led to some earnings disappointment. This is a common concern, frankly. Whether you want to talk about a drilling-services company or an actual energy producer like Chesapeake (NYSE:CHK), a lot of folks are worried that costs will get out of hand. But let's also keep things in perspective -- year-over-year vessel operating costs were up 12%, and overall operating margins were still better than last year's.
Management also extensively discussed another topic on many people's minds: the concern over new builds. In these markets, high prices often attract speculative new construction, and that new capacity soaks up the demand that was pushing up the prices. Once demand eases off, you get a cyclical bust. Only time will tell, but for now it would seem that the sheer pace of offshore activity (in the Gulf of Mexico and elsewhere) is pretty encouraging for long-term vessel demand.
Even assuming a sustainable period of good growth, these shares aren't all that exceptionally cheap. But as I've often said in the context of energy services, investor interest in playing this market has periodically divorced stock price performance from actual economic value creation. Margin fears notwithstanding, I'm not sure there's any reason to think that Tidewater shares won't continue to move in rough synchronicity with the oil services sector as a whole.
Further fuel-ish Foolishness:
Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).
