stock is suffering through another rough day as one of the market's biggest losers, but at least one energy stock is benefitting from the BP oil spill.
Helix Energy Solutions
shares jumped by more than 13% Monday after BP announced that it had contracted the company's Helix Producer I vessel to assist offloading oil and gas now being siphoned from the leaking well.
Helix stock was changing hands Monday afternoon at $11.80, up $1.26, or 12%, on volume of more than 4 million shares. Turnover in the name over the last three months has averaged 2.7 million shares a day.
Helix's stock has traded with significant volatility of late, rising as high as $15 in mid-May before dropping under $10 last week.
Helix was already active in the massive oil-spill containment effort in the Gulf of Mexico, with its Express and Q4000 vessels under contract with BP.
The federal government has been putting pressure on BP to speed up its collection of oil from the gushing underwater well. Over the weekend, BP bowed to pressure from the White House to present a plan that would increase its ability to siphon oil from the well -- up to 50,000 barrels daily -- earlier than previously forecast.
>>BP Oil Spill Update
Helix is moving the Producer I from its Phoenix oil field, also in the Gulf, where the rig had been set to begin pumping oil. Helix made the decision to delay operations at the drilled Phoenix well until completion of the BP work.
In effect, Helix is swapping the revenue it would have generated from the Phoenix field with revenue from the BP contracts -- though the exact terms of its deal with the embattled U.K. petroleum giant weren't disclosed.
Energy analyst Phil Dodge of Tuohy Brothers said the advantage to Helix is that the BP contract allows for an increase in the utilization rate of the vessel.
Under the contract, BP has promised to use the Helix rig for at least 60 days -- more or less the time it's expected for BP to finish drilling relief wells in the Gulf, putting an end (at least theoretically) to the leak.
Thus, Helix can delay production at the Phoenix site without any detriment to its business, while adding those 60 days under contract to BP, and increasing the visibility of its business backlog.
Not only does its revenue stand to increase, Helix will also receive greater publicity as a result of the deal and a chance to prove the value of its Producer I in a major market event, Tuohy Brothers' Dodge said. The Producer I is a new vessel.
"It's an important trial run, and if it works, the market will anticipate more contracts for the Helix Producer," Dodge said.
BP's vote of confidence for the new rig may have spurred the jump in Helix shares Monday, the analyst added.
"There are other vessels in the vicinity of the Gulf that could come quickly, but BP was comfortable enough with Helix as a marine contractor," Dodge said.
The Phoenix offshore field is completely drilled and, therefore, isn't subject to the moratorium in the Gulf of Mexico. Helix has the ability to start production at any time.
"Helix has a lot of moving parts and it's hard to get them all going in the same direction at the same time, but right now, with the marine contracting vessels and the anticipation of production from the Phoenix field, it seems as close as ever to having things lined up," Dodge said.
Helix had previously stated that vessels such as the Q4000 and Express could have trouble finding work if the offshore drilling moratorium is extended beyond the current federal ban of six months.
-Reported by Eric Rosenbaum in New York.
>>BP Oil Spill Update
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