Oceaneering International announced that it is making a preliminary change to its 2010 EPS guidance. This is being done in light of the May 27, 2010 U.S. Department of Interior announcement of a six-month moratorium on deepwater permitting and drilling activities in the Gulf of Mexico (GOM).
T. Jay Collins, President and Chief Executive Officer, stated, "Using limited information from our customers to date, we have estimated the impact of the moratorium could be an EPS reduction of $0.45 to our second half results. Consequently, our new annual EPS guidance range for 2010 is $2.80 to $3.10. Our reduced earnings guidance presumes declining use of ROVs in the GOM during the second half of 2010, lower demand for our IWOCS and pipeline repair system Subsea Product lines, and less deepwater vessel installation work for Subsea Projects.
"Oceaneering has extensive deepwater business operations in the GOM, some of which are tied to drilling activity. As of May 31, 2010 we had 255 ROVs in our fleet. Of these, 70 were located in the GOM, of which 35 were engaged in drill support service, including 32 onboard 29 floating drilling rigs. These ROV contracts include provisions for early-termination, and we are expecting some terminations and revised scopes of work.
"We are talking to our customers to stay abreast of what specific actions they intend to take and when. Our 2010 EPS guidance could change significantly as our customers' reactions to the moratorium materialize. An update to our 2010 EPS guidance will be given in our second quarter earnings release in late July.
"Despite the moratorium, we continue to believe that the underlying fundamentals supporting long-term secular growth in deepwater activity remain unchanged. We are well positioned to participate in this market niche."
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