Oil and gas services company Tetra Technologies (NYSE:TTI) said Friday that it expects to report a fourth quarter pretax loss of around $100 million due to property impairment charges.
The company said it estimates a fourth quarter pre tax loss in the range of $100 to $105 million, as a result of approximately $109 million in charges, including $80 million relating to oil and gas property impairments. According to Thomson Reuters, analysts are expecting a pre-tax profit of $12.47 million.
Tetra's charges are largely due to an increase in the Maritech segment's asset retirement charges, related to new regulations put in place last September to set permanent plugs in nonproducing wells in the Gulf of Mexico to avoid oil spills, which led to the early decommissioning of some of the company's properties.
"While we expect the 'Idle Iron' regulations to benefit our Offshore Services segment, the expected increase in demand for abandonment and decommissioning services as well as the acceleration of the timeline on which we had planned to decommission certain properties, both of which were precipitated by the regulations, were significant factors in the reevaluation of Maritech's asset retirement obligations," said president and CEO Stuart M. Brightman.
The company's offshore services segment has been under pressure due to the drilling moratorium, permitting delays, and competitive conditions in the Gulf of Mexico following the massive BP oil spill in April last year. The company also said its customers have not yet begun the anticipated decommissioning work that is expected to result from the 'Idle Iron' regulations.
"Although we do not expect a significant improvement in the first quarter of 2011, expected seasonally favorable weather in the Gulf of Mexico and the resumption of a more typical market environment in addition to incremental activity generated by the 'Idle Iron' regulations, should result in a much improved second quarter," added Brightman.
Tetra said it expects 2011 earnings to be within a range of $0.55 to $0.77 per diluted share, before discountinued operations. Analysts on average forecast earnings of $0.68 per share. The company also anticipates total operating revenue of between $845-$935 million.
Final audited fourth quarter results are expected to be released on February 25, 2011.