The total number of U.S. offshore oil rigs fell to only 17 last week. The U.S. alone had 65 offshore rigs operational as recently as 2014, but the downturn in crude oil prices had led to a steep drop-off in North American rig count.
Many offshore rigs have higher break-even prices for the oil they produce, which is why the offshore rig count continues to fall even as the U.S. land rig count has crept back up in recent weeks.
When WTI crude oil prices broke back above $50/bbl back in June, it looked as if oil prices were well on their way to a long-term recovery. Since then the market has taken a step back, and prices have once again dipped below $45/bbl.
In the past two years, offshore drillers Transocean LTD RIG 1.07% and Seadrill Ltd SDRL 2.85% have seen their share prices hammered by 71.7 percent and 91.8 percent, respectively. However, it’s not just offshore E&P stocks that have been crippled.
Unique Play
Bristow Group Inc BRS 2.36% is a helicopter transportation company with a very specific customer base. According to the company’s corporate profile, “Bristow Group Inc is the leading provider of helicopter services to the worldwide offshore energy industry.”
In that context, it’s understandable that Bristow’s stock is down 83.4 percent in the past two years.
The market seems uncertain about when an oil price recovery will happen and how much of a recovery it will be. Certainly, many offshore operations will require…
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