May wasn't a good month for companies that make up the WorkBoat Composite Index. The Index lost 122 points, over 9 percent. The loss erased all of this year's gains, ended a three-month winning streak, and put the Index in the red for 2010. The WorkBoat Composite is now down 2.6 percent for the year.
All 34 companies that make up the Index lost ground in May. And all of the top percentage losers have ties to the oil industry. Most companies that will likely see revenue losses due to the Gulf well blowout and spill saw their stock prices plummet in May. These include vessel and rig operators with exposure in the U.S. Gulf including Hornbeck Offshore Services , Gulfmark Offshore , Transocean (the owner of the Deepwater Explorer rig that was involved in the blowout and now rests at the bottom of the Gulf of Mexico), Hercules Offshore , Tidewater , Global Industries , Ensco , SEACOR Holdings and Superior Energy Services .
These operators received a double whammy in May when BP failed several times to cap the well followed by the Interior Department's announcement of a six-month drilling moratorium for all deepwater operations in the Gulf. This, according to the Offshore Marine Service Association , could idle over 100 offshore service vessels and 34 rigs - 24 semisubmersibles and 10 drillships. Transocean is in position to take the hardest hit, with 14 floating rigs currently contracted to work in the U.S. Gulf. Drilling contractors could also take a big earnings hit when operators invoke force majeure clauses in their contracts.
Some other implications could be a decline in business. Unless incentives are offered, new regulations will likely make it more expensive to drill in the U.S. Gulf. It may also lead to more consolidation among drilling contractors and boat companies. - David Krapf