COVINGTON, La. – Things may not be super rosy in the Gulf of Mexico, but they’re good enough for Hornbeck Offshore Services to bring some vessels back from Brazil.
The company said in a conference call today that Petrobras’ time charters for four 200-class new generation OSVs were not renewed and the Jones Act vessels would be heading north for the U.S. Gulf.
The challenge in Brazil is not to find work but to avoid day rates with hidden costs, chairman and CEO Todd Hornbeck told analysts after the company reported second-quarter earnings of $12 million on revenue of $131.6 million. This compared to a loss of $7 million on revenue of $80.8 million for the same quarter last year.
Hornbeck cited “unreasonable contract penalties outside our ability to control,” such as requirements to hire Brazilian seafarers who are in short supply. “We do not view it as a market that justifies growth without discipline.”
The penalties can be up to 30 percent of the contract price, and operating costs in Brazil can be twice those of the Gulf. Hornbeck’s remaining eight vessels will stay on contract in Brazil for one to three years.
“We’re going to wait until things settle out,” he said. “We’d rather take a wait-and-see attitude. Brazil’s going to be there a long time.”
After the Deepwater Horizon accident and drilling moratorium, Hornbeck and others looked to foreign markets for vessel work.
And while conditions have improved, there are “still bureaucratic impediments and delays associated with permitting in the Gulf of Mexico,” Hornbeck said.
An overall bullish view of the Gulf market means they’re pursuing growth either through acquisitions or newbuilds. The company said decisions to exercise options on additional 300-class OSVs are expected as early as September.