Faulty Bolts Create Headaches for Offshore Industry
Offshore drillers face potential downtime headwinds in 2013, but this is unlikely to affect our fair value estimates.
Nearly three years after the Macondo oil spill, the industry's eyes are focused on the Gulf of Mexico again. The Bureau of Safety and Environmental Enforcement has issued a notice to operators in the Gulf regarding a failed bolt that was part of General Electric's (GE) H-4 connector, which connects the blowout preventer to the wellhead. The BSEE has directed operators to pull up every BOP in the Gulf to inspect it and replace any faulty bolts with newly certified ones, which has created headaches for the offshore drilling industry. We expect operators are now asking their drilling contractors to inspect BOPs worldwide, given the zero-tolerance environment around well control post-Macondo.
We see no immediate threat to valuations for the offshore firms we cover. The impact on the offshore drillers could very well be muted, depending on the outcomes of specific negotiations on a rig-by-rig basis and whether the bolts can be replaced as part of an already-planned maintenance program. Outside the Gulf of Mexico, operators very well may be more lenient without the specific regulatory action that we've seen in the Gulf.
Stephen Ellis does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.
Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.
We’d like to share more about how we work and what drives our day-to-day business.
We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.
How we use your information depends on the product and service that you use and your relationship with us. We may use it to:
To learn more about how we handle and protect your data, visit our privacy center.
Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.
To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.
Read our editorial policy to learn more about our process.