Although the Bureau of Energy Management, Regulation and Enforcement (BOEM) has not formally announced it, analysts believe that a Central Gulf of Mexico (GOM) oil and natural gas lease sale scheduled for March 2011 will probably be shelved.

"In our view, the March Lease Sale 216 is likely to be canceled. As a consequence of the Macondo spill, BOEM has committed to preparing supplemental environmental reviews before any future lease sales," said analysts with FBR Capital Markets. "Moreover, the agency faces significant workload on other offshore regulations, including permitting and public comment period requirements."

The cancellation of the lease sale would pressure companies with exposure to GOM marine seismic, but not oil service or drilling operations, they said. "Marine seismic companies could lose revenue from purchases of geographical surveys in [the first quarter] if they do not have an immediate opportunity to explore new prospective production zones in subsequent quarters," the FBR analysts said.

"If Lease Sale 216 does not proceed as currently scheduled, Schlumberger, Petroleum Geo-Services [PGS] and CGG Veritas all stand to lose revenue as a result. We do not believe there would be a negative impact to oil service or drilling operations from the delay or cancellation of the March lease sale, since actually drilling and development operations usually occur several years after a respective lease sale," FBR said.

Schlumberger, PGS and CGG Veritas often perform marine seismic surveys for their libraries in addition to their contracted surveys. Exploration and production companies buy this data ahead of lease sales in order to make an informed decision on proposed leases.

"We estimate that Schlumberger, [PGS] and CGG Veritas have derived roughly 1%, 12% and 7%, respectively, of their total revenue from GOM multi-client sales over the last four quarters through 2Q10. For 1Q10, we estimate GOM multi-client sales were 2%, 18%, and 9% of total revenue for the same companies, respectively. 1Q11 would be the most at risk from [the] sale cancellation," FBR analysts said.

The firm estimates that 1% of Schlumberger's revenue (or $86 million) could be at risk in the first quarter. This could translate into a one- to two-cent impact on earnings per share.

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