Hornbeck Offshore Services (HOS) is growing sequentially by publicly providing supply vessels to the Gulf of Mexico and is positioning itself to increase its exposure to the region by 2014, the fastest growing deepwater market in the world, says James West, Lead Oil Service and Drilling Analyst at Barclays Capital.
“We’re running some 35 to 36 deepwater rigs as we speak, and we think that number could be 45 to 50 deepwater rigs as we go into the middle of 2014. They are at a point now where utilization is almost full. They are pushing day rates higher, and earnings are ramping up considerably as a result of that,” West said.
West likes this small-cap company as it is preparing aggressively for increased activity in the GOM next year. HOS, along with its equipment and services peer group, should also benefit from a global E&P spending increase of 7% in 2013.
“Hornbeck also has a very aggressive new build program, and they have a series of new builds that will start to enter market really in a big way in 2014, which will be perfectly timed for this increase in overall activity in the Gulf. That will add another layer of earnings and EBITDA growth for Hornbeck, so they are a nice pure play on the expansion of deepwater drilling in the Gulf,” West said.
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