Motley Fool
All posts from Motley Fool
Motley Fool in Motley Fool,

Oceaneering International's Stock Slid 12% in October After Tough Earnings Report

Image source: Getty Images.

What happened 

Shares of Oceaneering International (NYSE: OII) declined 12% in October. While there was a modest downturn in the overall oil and gas market due to some murmurings that OPEC might not cut production after it said it would in September, the biggest reason for Oceaneering's stock slide was the company's less-than-impressive earnings report on Oct. 27. 

So what

Without getting into too much detail about the goings-on in the oil market, the thing to keep in mind with Oceaneering is that its business is intimately tied to offshore oil and gas activity. As the cost of developing shale has declined precipitously, offshore drilling now produces some of the highest-cost barrels of oil, which means that offshore drilling will likely be one of the last places to see a pickup in activity. At today's oil and gas prices, the chances of seeing more offshore activity seems low. If oil prices were to slide again for any reason, most offshore work would be too expensive to complete. 

OII data by YCharts.

That delay is something that Oceaneering can't really afford right now. On an adjusted basis, the company generated a positive net income result, but total revenue for the quarter declined 26% year over year, and CEO Kevin McEvoy predicts that things are going to get worse before they get better. 

Now what

The bright side for Oceaneering is that its balance sheet is still in great shape. The company has over $440 million in cash on hand and about $800 million in total debt outstanding, so there is still plenty of cushion to withstand more financial pain as it waits for the offshore drilling market to improve again. That said, investors need to understand that this turnaround is still a ways off, and it will take an immense amount of patience to reap the rewards of an investment in Oceaneering International.

A secret billion-dollar stock opportunity
The world's biggest tech company forgot to show you something, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early in-the-know investors! To be one of them, just click here.

Tyler Crowe has no position in any stocks mentioned. You can follow him at or on Twitter 


The Motley Fool recommends Oceaneering International. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.