Hornbeck Offshore

Hornbeck is one of the largest supply vessel operators in the world and will soon be part of the largest after the merger with Tidewater which was announced on December 22 (see article on page X). Its main region of operations is the Gulf of Mexico, and it has recently entered the North Sea market through its 1993 acquisition of Seaboard Offshore Group Limited. In November 1994, Hornbeck acquired Oil & Gas Rental Services, Inc. (13 supply vessels) increasing its presence in the Gulf area as well as the quality of its fleet. The acquired vessels include four 220 ft. vessels and seven 188-192 ft. vessels of high quality that can command premium dayrates. In this report, Hornbeck is considered an autonomous entity.

Hornbeck’s revenues depend directly on the cycles of the offshore oil and gas exploration industry. Lower oil and gas prices that result in decreased activity in the Gulf area adversely affect Hornbeck’s revenues and profitability. However, with most of its operating expenses fixed, Hornbeck realizes increased profitability in periods of increased activity when dayrates and fleet utilization increase. Many industry experts forecast an increased demand for gas from the Gulf area and, therefore, favorable market conditions for Hornbeck. On the other hand, a potential drop in oil and gas prices that would cause a decline in the Gulf area activities would have an adverse impact on Hornbeck’s operational results.

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