Tickers in this Article: HOS, RIG, BP, NE, APC
A recent survey shows that the moratorium on deepwater drilling due to the BP (NYSE:BP) oil spill will cut 2010 capital spending by the exploration and production only slightly over the level indicated earlier this year.

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Capital Spending Survey
A recent survey by Barclays Capital on upstream spending by the industry indicates that spending will decline by $1.6 billion over previous estimates due to the moratorium. The survey by Barclays Capital estimates that overall global capital spending to explore and develop oil and natural gas in 2010 will increase by 12% over 2009, reaching $447 billion.

The good news is that, despite the moratorium, this figure is up slightly from the 11% increase in capital spending from the same survey performed in December, 2009. (To learn more about the oil spill, check out Is The Oil Spill Over-Dumping BP Shares?)

Company Effect
This cut in capital spending of $1.6 billion will hit some companies in the industry harder than others, with obviously the most damage to those who provide rigs and services to the offshore exploration and production companies.

Hornbeck Offshore Services (NYSE:HOS) operates a fleet of offshore supply vessels that service rigs and platforms in both the shallow and deepwater Gulf of Mexico. This is an important market for Hornbeck Offshore Services, and the company has 29 vessels servicing the area. The company is benefiting in the short term as some of its vessels are servicing the spill clean up effort, but ultimately any serious delay in the resumption of drilling may hurt the company's long-term prospects.

The rig owners will see an impact through decreased demand for deepwater rigs, and also through possible nullification of contracts under the force majeure provision in a contract that permits nullification if an unforeseen act prevents a party from performing its obligations under that contract.

In early June, 2010, Anadarko Petroleum Corp (NYSE:APC) issued a notice of force majeure to the owners of three rigs that the company had under contract in the Gulf of Mexico.

Transocean (NYSE:RIG) is the owner of the Deepwater Spirit, which received one of the force majeure notices. The Deepwater Spirit was under contract through November, 2010 at a day rate of $505,000 per day, and then set to renew for another three years at $520,000 per day.

Transocean has rejected the imposition of force majeure and said that it is in talks with Anadarko Petroleum to resolve the matter. Noble Corp (NYSE:NE), the owner of another rig that received notice, also rejected the claim.

The Bottom Line
Investors are starting to get the first hard numbers on cutbacks to capital spending due to the Gulf of Mexico oil spill, and the reductions will barely shave 1% off of previous growth estimates. (For further stock analysis, check out Will BP Survive This Crisis?)

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