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UPDATE 3-Baker Hughes sees much better 2nd half in US Gulf
June 3, 2011 / 12:58 PM / 6 years ago

UPDATE 3-Baker Hughes sees much better 2nd half in US Gulf

* Work started on half the dozen permitted deepwater wells

* Follows Noble Energy find, US majors’ plans to add rigs

* First flurry of permits may not foretell future-analyst

* Baker Hughes shares up 2.4 pct, rivals up 1-2 pct (Adds analyst comment, rivals’ share prices, byline)

By Braden Reddall

SAN FRANCISCO, June 3 (Reuters) - Oilfield services company Baker Hughes Inc BHI.N sees a “much better” second half of 2011 in the Gulf of Mexico thanks to resumed deepwater drilling, pushing its stock up 3 percent.

Chief Executive Chad Deaton said drilling had started on about half of the dozen deepwater wells with permits, with 11 more permits pending on wells where customers had awarded service contracts. Analysts, however, remain concerned about how quickly permits will flow once the backlog is cleared.

Deaton said clients had given plenty of notice on their plans so his company was able to move people back from where they relocated after 34 deepwater rigs in the U.S. Gulf had to halt drilling following last year’s Macondo disaster.

“They went to zero overnight, and that puts a real stress on any company that’s big in the Gulf,” Deaton said in a webcast presentation at the Sanford Bernstein Strategic Decisions Conference in New York on Friday.

Deaton, who steps down at the end of the year, forecast improvements for the Gulf of Mexico market in the third and fourth quarters.

“I think the Gulf is going to be much better in Q3, Q4. It will not get back up to the 34 rigs, obviously, but we’re hoping to have mid-teens maybe by the end of the year,” he said.

Shares of Baker Hughes, the third-largest oilfield services company, were up 2.4 percent to $75.34 in afternoon trading, leading the sector higher. Larger rivals Schlumberger Ltd (SLB.N) and Halliburton Co (HAL.N) rose between 1 percent and 2 percent.

“If it’s good news for Baker, it’s certainly good for the others,” said Roger Read, oilfield services analyst at Morgan Keegan & Co.

Renewed activity has yielded early results in the Gulf of Mexico. Noble Energy Inc (NBL.N) announced this week that it made a deepwater oil discovery at its Santiago prospect, where it recently resumed drilling.

Exxon Mobil Corp (XOM.N) plans to move a deepwater rig to the Gulf of Mexico next year, rig owner Transocean Ltd (RIG.N) RIGN.VX said last month. That would mark a rare addition to the region’s fleet after a year of departures. [ID:nN12131107]

Seven deepwater rigs moved away, some temporarily, due to a moratorium that followed the BP (BP.L) Macondo well blow-out that destroyed Transocean’s Deepwater Horizon, killing 11 people and unleashing the largest offshore oil spill in U.S. history. [ID:nN27265554]

Dow Jones Newswires has reported that Chevron Corp (CVX.N) is likely to add deepwater rigs in the Gulf of Mexico as it pushes to meet deadlines for projects over the next few years.

But Read said it was likely too early to declare an all-clear for U.S. deepwater drilling generally, since plans for future wells were likely to face even more scrutiny.

“The problem with the Gulf is not knowing what the true post-Macondo permitting is going to look like,” he said. “Until we know how it’s going to work out, you’ve got to be a little bit concerned that the next wave of permits runs into an environmental roadblock.” (Reporting by Braden Reddall, editing by Gerald E. McCormick and John Wallace)

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