I've been digging around on the topic of the order "pipeline" for oil services in the current environment of oil pricing.
While the recent highs were called very bullish for the pace of development of high $ cost (or high $ risk) drilling and production, the current pricing seems to be sufficient to prevent sudden changes in most types of projects.
The types of projects most likely to be changed are the ones that have a less costly and complex shutdown and startup cycle. Land and near shore oil and gas drilling would fit in this category.
If the oil pricing stays in the $50-70/bbl range for longer, the next category affected would be the projects that are estimated to have the highest cost of production/bbl such as oil sands.
Long range projects such as deep drilling and exploration are very complex in terms of equipment and logistics with multiple contracts booked months - years in advance. The cost to shift these projects to a standby or wait is so large that nothing short of a collapse of demand from emerging economies (China India) would call for any significant changes in CapEx in the short term (1-3 years).
DDI has involvement in various stages of well development from the rig fabrication to well completion and beyond so it seems that the order pipeline is still in good shape.
The Q3 should have revenues representing each of these stages
Flotation Technologies - Drill riser flotation for a new drill rig - Delba III
DDI - Umbilical installation for well completion
DDI - Retro buoy - life extension cathodic protection
Mako - Inspection for maintenance and repair
We will also likely have expenses from the development of the West yard and new structures (modulars) for DDI/Electrowave offices and shops. Not sure if any of that office space is for our new Deep Down Design Studio graphics/animation operation.
It should be an interesting filing.
It seems a bit rough lately.
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