Blog > Oil and Energy > Tel Offshore Trust (TELOZ) plummets 64% at open
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Tel Offshore Trust (TELOZ) plummets 64% at open

Today's Financial News - Posted October 8, 2008

Tel Offshore Trust (TELOZ) fell 64% this morning. And it’s not only because oil prices are tanking. The company just lost some key assets in Louisiana. And it’s predicting a bad year ahead.

by Stephanie Grimmett

Baltimore — (TFN):  You can just hear the fellas over at Tel Offshore Trust (NASDAQ:TELOZ) discussing today’s press release.

"Why’d you have to tell people about that? They’d forgotten about us. And now we’re gonna get it!"

"I know. I know. No one remembered to price in the recent crash in oil prices to our shares yet. But I couldn’t exactly NOT announce it. I waited as long as I could. But the SEC had started sniffing around the front yard. And I got scared. OK?"

Tel Offshore (it owns 25% interest in some oil and gas properties off the Louisiana shore) managed to weather the oil price collapse with a less than a 30% drop and a nifty $1.15 payout to investors. That’s pretty great when other small-time oil and gas companies are seeing 50% falls.

But that all changed this morning when Tel finally told people about the damage it received during Hurricane Ike (you know, the one that happened nearly a month ago). It turns out the Eugene Island 339 rigs and wells, which supply 48% of the trusts’ revenues, were totaled in the hurricane. And Tel is predicting that it won’t see a profit again anytime soon.

Did they just not check before now? Or were they hoping to pretend it didn’t happen? Maybe they were trying to come up with replacements and didn’t realize how bad the damage was.

Or is totaling an oil rig like totaling your car? Did they have to wait for an insurance adjuster to come out, take a leisurely cruise around the part of the Gulf where the platform used to be and say, "yeah, that’s a gonner," before they could declare it as such?

Whatever happened, the trust’s delay postponed the inevitable, which has now come to pass. Tel Offshore plummeted 50% today (at open, it was closer to 64%), and it won’t get that price back until it can guarantee a profit again. Good luck fellas.

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Posted by Stephanie Grimmett · Filed Under Oil and Energy 

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