Gulf Repair Job Tougher Than Expected
"The Gulf Coast infrastructure is a mess," said Richard Bachman, chairman and CEO of New Orleans-based Energy Partners (EPL), a Gulf of Mexico and Gulf Coast exploration and production concern. "Getting back to our platforms is one thing; accessing pipelines and processing plants is a much greater challenge."
Bachman said his company hopes to have about 80% of its production back online in the next few weeks, but it will take several more weeks to bring its prized East Bay field back to pre-storm levels due to damage to pipelines and processing facilities. "Anything underwater will have to have extensive electrical repairs," he said.
Other Gulf producers at the IPAA confab told the same story, with the same conclusion to draw: Production will come back only as fast as pipelines and processing facilities return to service. While most pipeline companies have been eerily quiet about the status of pipelines, major facilities are still offline with little guidance as to when they will return to full strength.
Don't Miss the Boats
The need to inspect and repair pipelines and other Gulf of Mexico infrastructure has resulted in big demand for work boats in the Gulf of Mexico. Companies like Hornbeck Offshore (HOS) -- which my firm has provided investment banking services to in the past year -- and Tidewater Offshore (TDW) are seeing strong demand for their vessels, with day rates continuing to climb. As a result of storm demand, boats that were working for as little as $10,000 to $12,000 per day last year are getting as much as $20,000 or more per day currently.The boat market is so strong that Tidewater is bringing at least a dozen boats out of idle status and putting them to work in the Gulf. Assuming day rates in the $10,000 to $12,000 range, 20 boats could add an unexpected 50 cents to Tidewater earnings in the coming year.
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