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Unformatted text preview: Spencer Karren Week # 3 In a recent article in businesweek.com explains how the BP rig blowout has hurt the oil services companies that work in the Gulf of Mexico but analysts believe in the long run, companies can benefit from new rules. On May 27, President Obama declared a six-month standstill on all deepwater drilling in the Gulf of Mexico the article reads, The ban on deepwater drilling is sure to hurt oil services companies' earnings for the second half of 2010 and for the full year. Parker expects earnings to be reduced by 5 percent to 10 percent on the low end and 10 percent to 15 percent on the upper end. The impact might be worse if companies don't trim their cost structures, says Parker, who expects them to move personnel around to manage expenses. Thirty percent of oil the U.S. consumes comes from the Gulf. This is a great source of federal revenue because of the minerals royalties. An energy analyst at T. Rowe Price sees this problem as a short-term money issue. The analyst quotes "If you have a one-year time horizon, you'll be very happy owning these stocks," he says. "You could own these things for the next two years and get them cheap for the next six months." It is comforting to hear that BP and other oil services companies will most likely make it through this disaster. I strongly feel that BP has made a mistake and should pay the full cost of through this disaster....
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- Summer '10