Gulf Drilling Halt Stings Oil Service Companies
June 17, 2010
The moratorium on deepwater drilling in the Gulf of Mexico has begun to bite oilfield service companies, with market analysts now forecasting lower than expected spending on new projects in the region and pressure on drilling stocks, according to Reuters. The U.S. Minerals Management Service implemented the six-month halt to drilling in water deeper than 500 feet in May following the blowout and explosion at BP’s deepwater well, bringing new projects to a standstill in one of the world''s busiest oil and gas regions. A survey of companies released by Barclays Capital showed oil and gas producers would likely spend $1.6 billion less on exploration and production in United States than they had expected at end-2009 because of the moratorium. Spending in the United States is now expected to rise 18 percent to $85 billion from last year, rebounding from the weak 2009 when soft oil prices curtailed the hunt for new oil and gas supplies. Exploration and production budgets depend heavily on oil and gas prices, and are a key driver of revenues for oilfield services companies such as Schlumberger Ltd, Halliburton Co and Baker Hughes Inc. The moratorium is widely viewed as a threat to revenues at companies such as Diamond Offshore, Ensco Plc and Transocean Ltd.