In the past two days, two major drilling contractors in the Gulf of Mexico have released their third-quarter earnings, which gives us the best snapshot yet of the financial impact from the summer’s drilling moratorium.
Revenue for Noble Corp., which had six rigs idled by the drilling ban, fell by $146 million in the Gulf, company officials told analysts in a conference call today. Noble’s earnings plunged to $86 million from $426 million for the same quarter last year.
Things aren’t looking any better for Diamond Offshore, which moved two rigs out of the Gulf during the ban. Diamond’s revenue fell 12 percent from a year earlier, to $799.7 million and its profit fell by almost half, to $198.5 million from $364.1 million.
Companies like Noble and Diamond have managed to avoid layoffs by negotiating lower “suspension” rates with customers that keep their rigs staffed while they’re idle. Many other service companies in the Gulf have been doing the same.
So when the administration notes that the job loss has been lower than originally feared, it’s missing the point. It’s companies like Noble and Diamond – and their shareholders – who are bearing the biggest cost of the moratorium.
The question facing the companies and their investors now is how quickly things will recover. The ban’s been lifted, but the uncertainty remains.