HOUSTON (Dow Jones Newswires), May 19, 2010
The massive oil spill in the U.S. Gulf of Mexico, which has resulted in a temporary ban on new drilling, is clouding the immediate future for oilfield-service providers--but could be profitable for them in the long term.
Investigations into the events surrounding an April 20 explosion and fire that sank the Transocean rig Deepwater Horizon will likely lead to more strict regulation of the U.S. offshore drilling industry, ratcheting up costs and safety standards. This increased
"I don't think in the near term this is good for service companies or the industry because operations are disrupted," said Gene Shiels, a spokesman for Baker Hughes, which provides directional drilling services and drilling fluids for offshore drilling projects.
But Shiels added that in the long term, heightened standards for back-up systems or requirements to add more equipment to existing rigs could create opportunities for service companies.
Companies that could benefit are Schlumberger and Halliburton, which provide equipment and services for offshore drilling.
Fadel Gheit, an analyst with Oppenheimer in New York, said service providers "will have more frequent interactions with the
The increasing uncertainty affecting offshore drilling casts an unexpected shadow on the sector's fortunes, which rode high even amid
In the near term, drilling contractors and service companies also face a moratorium on new drilling permits until the U.S. government
"We don't know what this moratorium is going to do and how long it is going to last," said Bill Herbert, an analyst with the Houston-based energy investment bank Simmons & Co.
Copyright (c) 2010 Dow Jones & Company, Inc.
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