The contagion is spreading from the explosion at the Macondo well operated by BP plc (NYSE:BP) that destroyed a leased semi-submersible owned by Transocean Ltd. (NYSE: RIG) and killed 11 workers. Standard and Poor’s Rating Services has already lowered ratings on BP and Transocean debt as well as debt on Anadarko Petroleum Co. (NYSE: APC), a minority partner in the well.
S&P has now widened its net of bad news to include several other companies with exposure to Gulf of Mexico operations. The ratings service lowered non-investment grade ratings on ATP Oil & Gas Corp. (NASDAQ: ATPG), Hercules Offshore Inc. (NASDAQ: HERO
), Helix Energy Solutions Group Inc. (NYSE: HLX), and Hornbeck Offshore Services Inc. (NYSE: HOS). The outlook for Seacor Holdings Inc. (NYSE: CKH) was revised downward from ‘stable’ to ‘negative, as was the outlook for Anadarko. PHI Inc. (NASDAQ: PHII) and Transocean were put on ‘watch’ status for further downgrade.
The ratings actions reflect S&P’s worries about the “burgeoning scope of the Macondo well disaster” and how the oil leak could disrupt operations and the overall flow of oil from the Gulf. The six-month moratorium on deepwater drilling will delay new permits and make it more difficult to get permits once the moratorium is lifted. The probability that new drilling standards and procedures will also be in place also weighs on the ratings and outlooks for these companies.
PHI Inc. is a small-cap services company that provides air transportation to Gulf rigs and platforms. The stock’s 52-week range is $14.70-$24.10, and its average daily volume is very low. The company holds long-term debt of about $208 million and has only $7.4 million in cash. Shares closed at $15.42 yesterday.
Seacor provides shipping services to offshore rigs. Its stock trades in a 52-week range of $67.01-$92.23 and it closed yesterday at $68.10. It set a new 52-week low yesterday before getting a boost in the last half hour of trading.
Hornbeck also provides offshore supply shipping. It’s a small-cap stock that also set a new 52-week low yesterday. The stock’s 52-week trading range is $12.70-$30.55. Hornbeck has about $44 million in cash and almost $750 million in long-term debt.
Helix is an offshore energy company that develops and operates its own wells and also provides services to other offshore drillers. Its 52-week trading range is $8.76-$17.00, and it closed yesterday at $10.04. The company holds $212 million in cash and long-term debt of $1.35 billion.
Hercules is a small-cap provider of shallow-water drilling and other contract services. Its 52-week trading range is $2.39-$7.28, and it closed yesterday at $2.65. The company’s long-term debt totals about $856 million and it has about $138 million in cash.
ATP is a small-cap E&P company. Its stock has a 52-week trading range of $5.22-$23.97, and it closed yesterday at $8.53. The company has about $143 million in cash and long-term debt totals $1.25 billion.
This might be only the beginning for new debt ratings as the full impact of the Gulf spill finally penetrates the mind of the financial world.
