Wednesday, September 26, 2012

Return to GOM Drilling Bullish for Conrad ($CNRD)

I was just reading a Citi research piece that was very bullish on offshore oil services including the Gulf of Mexico:

"The Gulf of Mexico, which saw deepwater backlog fall 10% in 2011 following the Macondo moratorium, is back at record backlog and we expect further supply commitments in the coming months."
As we've discussed in past posts, fundamentals are bullish for the inland barge business. Jeffboat commented that "new dry barge builds required to replace retiring barges may strain the capacity of barge manufacturing during the next five years."

Historically, oil and gas related work was a big component of Conrad's business. However, the oil price crash and then the post-DWH moratorium resulted in a string of bad years for this stream of business.

Luckily they were able to replace this business with other types of projects. But if both inland barges and energy related business are booming at the same time, revenue and profit margins should both increase substantially.  

1 comment:

eahilf said...

The Oil Hub Where Traders Are Making Millions

Tugboat pilot Barry Meredith hauls barges of oil as big as football fields for a living. He calls his route “the loop,” which starts with him guiding his boat and two empty 300-foot barges into the Port of Catoosa, outside Tulsa, Okla. Meredith steers toward a cluster of seven storage tanks brimming with crude that’s been trucked in from wells in Oklahoma and Kansas...Moving 43,000 barrels of oil from the tanks into the barges is a 12-hour process, and one mistake can mean disaster. “You get 4,000 barrels going through that hose every hour, and you let something ass up. … Man, it makes a big mess,” Meredith says in his Florida drawl, his face deeply tanned from 19 years on a tugboat. At dawn the next day he’ll leave for Mobile, Ala. The route of winding rivers is more than 1,300 miles long and takes about a week.