Helix Energy Solutions (HLX)
While Helix Energy Solutions (HLX) started out as a firm dedicated to subsea trenching and underwater pipeline construction, it has since branched out over the years into a full offshore services firm. That includes a hefty dose of well containment and repair work.
The key for HLX has been development of its Fast Response System (HFRS). The system allows for rapid cleanup of subsea oil spills and has been used in nearly 106 new drilling permits since 2011.
HFRS has been a big driver for earnings. For the first quarter of 2014, Helix managed to produce net income of $53.7 million, or 51 cents per share. This compares to just profits of 2 cents per share for the same period in 2013. Meanwhile, shares of HLX stock are still pretty cheap and currently trade for forward P/E of just 11.
Oceaneering International (OII)
When it comes torepairing an oil platform damaged by a major storm, much of the work is done under the sea. Unfortunately, with E&P firms drilling deeper and deeper, regular scuba divers can’t simply do the work. It takes specially designed remote-operated vehicles (ROVs).
And Oceaneering International (OII) has ROVs in spades — 304 in fact.
Investors have mainly focused on Oceaneering’s ROVS in the deepwater drilling space. Currently, around 70% of Oceaneering’s ROV profits come from this segment. Recent slowness in drilling rates have crimped margins across the sector. However, OII’s products are equally as important when it comes to repair work and well intervention. And unlike an ultra-deepwater drilling rig, moving ROVs around is quite inexpensive. That gives OII stock a major advantage. Investors will enjoy that advantage — along with the forward P/E of 15 on OII stock.
Moving all that equipment and personnel to an offshore drilling platform takes plenty of muscle, and no one does it better than Tidewater (TDW).
The firm basically created the offshore “work boat” industry back in 1956, when it launched the world’s first vessel tailor-made to support the offshore oil & gas industry. Today, Tidewater operates 294 support vessels, barges and ships. These vessels work in variety of support functions for the energy sector — including construction and restoration.
While profits have slipped recently — due to lower drilling activity — management expects demand to pick up during the spring and summer months. That forecast for sunnier skies at TDW doesn’t event include any potential hurricane clouds. Tidewater should get a boost if there’s any sort of real storm activity this year.
As investors wait, they can be treated to a new $200 million share buyback program and a 2% dividend. TDW currently trades for a forward P/E of just 9.
As of this writing, Aaron Levitt did not hold a position in the aforementioned securities. However, he may initiate a long position in OII within the next 72 hours.