Gulf Struggles to Recover From Rita

Once out to sea, platforms and other infrastructure have to be inspected. That helps companies like Oceaneering International(OII Quote), which Thursday night announced it would build another six remotely operated vehicles (ROVs), a sign of confidence that the inspection and underwater work market will continue to improve. Also, companies like CalDive(CDIS Quote) and Superior Energy(SPN Quote) provide a number of services needed as companies work to recover from the hurricane sisters.

Lost Time

While high oil and natural gas prices will help companies post solid third-quarter results, offshore producers will likely struggle to make production goals in both the third and fourth quarters. Gulf of Mexico-focused companies like Remington (REM Quote), Houston Exploration (THX Quote), Energy Partners(EPL Quote) and others will feel the pinch in their numbers. The longer that production is off-line, the larger the impact. In the coming days, the uncertainty of production restarts will likely begin to weigh on some of these producers.

Some services companies will also feel the pinch. Drillers like Rowan(RDC Quote), which has lost as many as four rigs for at least some period of time in the storms, could see 2006 numbers affected from Katrina and Rita. Two of the rigs now missing were scheduled to begin lucrative work in Saudi Arabia in the coming months.

In addition, tubular provider Lone Star Technologies(LSS Quote) found two facilities impacted by Rita and the damage is likely to affect third-quarter shipments and results. While it is difficult to determine the exact magnitude, the damage came at the end of the quarter that is typically a period of heavy shipments for the firm.

Earlier last week, I argued that the damage from Rita could be worse than expected. As reality sets in over the coming days, it looks like the impact may be more significant than even I expected.

Damn those winds.