• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

Rising Prices Produce Record Earnings for New Orleans-Area Oil and Gas Companies

Posted on: Monday, 5 September 2005, 03:01 CDT

The common theme among the earnings reports rolling in from New Orleans-area oil and gas production and service companies is record.

Unprecedented oil and gas prices have spurred an increase in drilling in the Gulf of Mexico, which has translated into record earnings and revenues for production and service companies.

EPL still exploring

For Energy Partners Ltd., second-quarter earnings hit a record $106.2 million, up 41 percent from $75.1 million in the 2004 second quarter. Net income was $18.1 million, up 31.2 percent from $13.8 million in the same period last year.

We are pleased to report another strong quarter with record levels for production, revenue and cash flow, said Richard Bachmann, EPL chairman and CEO. With the increased capital budget that our board recently approved, we expect that we will drill over 50 exploratory wells in 2005 and we are still on track to deliver on our guidance of 25 percent to 35 percent production growth over 2004.

EPL's board recently approved a 17 percent increase in the 2005 capital budget to approximately $305 million from the previous budget of $265 million. Capital budgets fund exploration programs.

With 24 discoveries in 34 exploratory tests year to date (71 percent), we are ahead of the curve to complete our 2005 exploratory program, Bachmann said. We have already drilled more wells in 2005 than we did in all of 2004, and at the same time we are near our historical success rate.

Hornbeck demand

Record day rates are driving earnings at supply vessel operator Hornbeck Offshore Services Inc. The company announced second- quarter revenues of $41.4 million, up 36.6 percent from revenues of $30.3 million in the second quarter of 2004.

Net income increased 305 percent to $7.7 million compared with net income of $1.9 million for second quarter 2004.

The ongoing increase in drilling and production activity in the deepwater and deep shelf segments of the U.S. Gulf of Mexico continues to put upward pressure on our offshore supply vessel day rates, said Hornbeck CEO Todd Hornbeck.

During the summer, average day rates above $13,000 per day broke Hornbeck's previous all-time high of $12,700 set in the fourth quarter of 2001, company officials said.

Superior expansion

Superior Energy Services Inc. announced record net income of $25.1 million in the second quarter, up 189 percent compared with net income of $8.7 million in second quarter 2004. Even excluding a one-time gain of $2.1 million from the sale of 17 liftboats, net income was still at record levels.

Revenues also set a record by hitting $190 million in the second quarter, up 38 percent from $137.5 million for the second quarter of 2004.

The drivers of these record operating results were our continued expansion of our rental tools business into land and international markets, our ability to increase our oil and gas production, higher commodity prices, and increased demand for rental tools, production- related services, environmental and plug and abandonment services in our core Gulf of Mexico market area,said Terry Hall, Superior chairman and CEO.

Tidewater growth

Although the oil and gas industry is historically a cyclical business, industry officials predict long-term growth.

The cyclical nature of the industry will still be there but I think the cycles will be very short, said Dean Taylor, chairman of fleet operator Tidewater Inc. The amplitude of the swings will be much reduced.

Tidewater's net income in the first quarter jumped 124 percent to $28.9 million, up from $12.9 million for the same period last year. Revenues rose 22 percent to $192.2 million from $158.1 million.

Oil prices probably won't fall below $40 a barrel and will most likely remain above $50 a barrel for the long term, Taylor said. Prices will be driven by demand from China, India and every other country that wants to move up from the Third World, he said. That will boost earnings at companies like Tidewater.

Oil and gas is becoming increasingly more difficult to find, produce and bring to market, Taylor said. Operators are having to run faster and faster to keep production levels constant. As they run faster, they need our services.

(Copyright 2005 Dolan Media Newswires)

Source: New Orleans CityBusiness

More News in this Category