With operators getting hammered in September, the WorkBoat Composite Index lost over 6%, or 112.66 points. Every operator except Cal Dive lost ground during the month, with Hornbeck Offshore Services, Tidewater and Gulfmark Offshore among the biggest percentage losers. The PHLX Oil Service Sector Index lost 29 points, about 10%. For the month, losers topped winners by a ratio of more than 7-1.
The big drop in oil prices have hurt oil service issues. As of Oct. 13, oil prices were hovering near multiyear lows. On Oct. 10, the spot price for WTI was $85.11 a barrel, down over 13% since the year began.
However, Fatih Birol, the International Energy Agency’s chief economist, told the Wall Street Journal on Oct. 13 that global oil prices above $80 a barrel can sustain all production projects. “Globally, when we look at oil prices today, I believe there is not one single drop of which cannot be produced for commercial reasons with today’s prices,” Birol told the WSJ.
In their second-quarter earnings calls this summer, several oil service companies maintained positive long-term outlooks. Todd Hornbeck, chief executive officer of Hornbeck Offshore, said he firmly believed that the sector was transitioning into a sustained up-cycle.
Hornbeck pointed out that there were about 13 major deepwater development projects scheduled to come online over the next few years in the Gulf of Mexico.
“We are seeing unprecedented growth, not only in deepwater drilling, ... but in the development projects that successful drilling campaigns inevitably spawn.”
