- Reality for offshore drilling companies is stark, Tisch says
- Loews declines in New York after posting quarterly loss
Jim Tisch said “chaos continues to reign over the energy market” after the slump in commodity prices fueled a fourth-quarter loss and stock decline at his Loews Corp.
“If these pricing levels persist over the next two years, we’ll be in a drastically under-supplied oil market,” Tisch said Monday in a conference call discussing results at New York-based Loews. “The natural-gas market is under the same dark cloud, as the entire energy industry is being affected by this precipitous downturn.”
Loews posted a net loss of $201 million for the three months ended Dec. 31, as the Diamond Offshore Drilling Inc. unit wrote down the value of rigs and halted its quarterly dividend. Loews fell 1.6 percent to $35.71 at 11:29 a.m., extending its decline for the year to 7 percent after slumping at least 8 percent in both 2014 and 2015.
Tisch took a more pessimistic tone than in late 2014 when he said “trouble is opportunity” for Diamond Offshore and said the company might have a chance to add to its fleet of rigs. Oil has dropped by more than half since those remarks to about $30 a barrel.
“The reality for offshore drilling companies is stark,” he said Monday. “The drop in oil prices is causing oil companies to slash exploration and development budgets and reduce or cancel drilling contracts, decimating day rates and idling rigs. The market for rigs of all types, including new, ultra-deepwater drill ships, is currently, and will for the immediate future, be drastically oversupplied.”
He said there is still high demand for oil and that low prices will lead to less exploration and an eventual rebound. Loews also has a hotel business, the CNA Financial Corp. insurance unit, and Boardwalk Pipeline Partners LP, which transports and stores natural gas. Tisch agreed in 2014 to sell HighMount Exploration & Production LLC after being caught off guard by a decline in natural gas prices.