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Forbes  Mar 27  Comment 
Bargain hunters are wise to pay careful attention to insider buying, because although there are many various reasons for an insider to sell a stock, presumably the only reason they would use their hard-earned cash to make a purchase, is that they...
Bulk Transporter  Mar 17  Comment 
Would you like to have an impact on the hours-of-service regulations? The Federal Motor Carrier Safety Administration is recruiting truck drivers and carriers willing to participate in a driver restart study. This study will measure and analyze...
Forbes  Mar 4  Comment 
Bargain hunters are wise to pay careful attention to insider buying, because although there are many various reasons for an insider to sell a stock, presumably the only reason they would use their hard-earned cash to make a purchase, is that they...
Bulk Transporter  Feb 5  Comment 
Dillon Transport sees continued growth opportunities in the oil and gas shale plays FMCSA officially suspends 34-hour restart under HOS rule Fleet safety, infrastructure issues dominate 2nd...
Benzinga  Feb 3  Comment 
Analysts at Credit Suisse downgraded Hornbeck Offshore Services, Inc. (NYSE: HOS) from Outperform to Neutral. The price target for Hornbeck Offshore has been lowered from $36 to $18. Hornbeck Offshore shares have declined 43.78% over the past...
Market Intelligence Center  Jan 27  Comment 
The patented option trade-picking algorithms behind MarketIntelligenceCenter.com's Artificial Intelligence Center have selected a covered call trade on Hornbeck Offshore Services Inc. (HOS) that includes 8.24% downside protection. Sell one...
Bulk Transporter  Jan 23  Comment 
  The Federal Motor Carrier Safety Administration (FMCSA) announced in the December 20 issue of the Federal Register that it has suspended enforcement of certain sections of the hours of service (HOS) rules as required by the Consolidated and...




 
TOP CONTRIBUTORS

Hornbeck Offshore Services operates offshore supply vessels (OSVs), multi-purpose support vessels (MPSVs), and a shore-base facility. The company makes money by providing logistics support and specialty services to the offshore oil and gas exploration and production industry, primarily in the US, Gulf of Mexico, and select international markets.[1] With increased regulation following incidents in offshore drilling in the Gulf of Mexico (GoM) such as the Deepwater Horizon oil spill by BP (BP), Hornbeck has been forced to diversify its business line from traditional upstream GoM based operations.

Business Growth

Hornbeck comprises of two business units:

  • Upstream operations primarily use OSVs and MPSVs. OSVs serve as exploratory and developmental drilling rigs, whereas MPSVs serve the same purposes except are significantly larger and more complex.[2]
  • Downstream operations provides services for the domestic tank barge industry, which is centered around service for marine transportation of crude oil, petroleum products and petrochemicals. The largest domestic market in this industry is on the East Coast.[3]

Trends and Forces

Following Deepwater Horizon, Government Regulations in the GoM has Tensed Tremendously

Most of HOS's operations are center around the Gulf of Mexico (GoM), but following BP's oil spill in the Deepwater Horizon incident, government regulations concerning offshore oil drilling particularly in the Gulf of Mexico have heightened, thereby influencing the bottom line for companies like HOS. In particular, the US government, through OPA 90, assigns liability to each responsible party for oil removal costs and a variety of public and private damages. Since HOS operates as a support group for oil drilling operations in the GoM, the company is likely to be liable to some extent should incidents occur in the GoM again.

HOS Operates in a High Fixed Costs Industry Making it Difficult to Shift in Demand

The industry in which HOS operates under incurs high levels of fixed costs through its OSV and MPSVs, which are unable to be easily changed regardless of level of business activity. These high costs especially hurt in times of low productivity due to reduced demand. Further weather interruptions such as during Hurricane Season causes significant negative effects as HOS continues to incur costs regardless the equipment is at bay or out at sea.

Competition

HOS competes with other offshore drilling support companies such as:

  • Tidewater (TDW) provides offshore supply vessels and marine support services to the offshore energy industry through the operation of offshore marine service vessels.[4]
  • Seacor Holdings (CKH) owns, operates, invests in and marketing equipment, in the offshore oil and gas, industrial aviation and marine transportation industries.[5]
  • GulfMark Offshore (GLF) provides offshore marine services primarily to companies involved in the offshore exploration and production of oil and natural gas.[6]




References

  1. HOS Business Description
  2. HOS FY2010 10-K, Pg 9
  3. HOS FY2010 10-K, Pg 10
  4. TDW Business Description
  5. CKH Business Description
  6. GLF Business Description
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