Drilling and oilfield service stocks fell sharply on Thursday after offshore driller Rowan Cos. Inc. said the business outlook for the third quarter of this year was uncertain.
A fall in the price of crude oil also contributed to price weakness in the sector.
In early afternoon trading Rowan's stock was off $1.83, or 8.9 percent, at $18.74.
Other big losers among drilling and oilfield service stocks included Global Marine Inc. - off $1.11 at $16.10 - Transocean Sedco Forex
Inc. - down $2.14 at $37.21 - BJ Services Inc. -- $1.75 lower at $23.35 - Smith International Inc. - down $3.13 at $54.45. The losses for these companies' stock prices ranged anywhere from 5 to 7 percent.
After the market closed on Wednesday Rowan reported that second-quarter net income rose to $34.3 million, or $0.36 a share, from $11.1 million, or $0.12 a share a year earlier.
The Houston-based company had warned investors last month that it would report second-quarter earnings per share of $0.35 to $0.40, rather than the $0.45 it had previously forecast, because of slower than expected business in June.
Rowan said on Wednesday that the business outlook for the third quarter of this year was uncertain and that it expected earnings for the quarter of $0.30 to $0.40.
The company's third-quarter earnings guidance
was at the low end of analysts' expectations of $0.30 to $0.62. Analysts' mean estimate had stood at $0.50.
Until recently Rowan had benefited from a boom in drilling for natural gas in the Gulf of Mexico.
However a drop in natural gas prices in recent weeks has put pressure on oilfield service and drilling stocks.
An analyst from Hibernia Southcoast Capital said in a research note on Thursday that he expected a decrease in drilling activity in the Gulf of Mexico, in response to weaker gas prices, would lead to a "dramatic decline" in the daily rig rental rates earned by offshore drillers in the second half of this year.
Compounding problems for the sector on Thursday, U.S. August crude oil futures fell $0.94 to $26.17 per barrel.
The OSX index of oilfield service and drilling stocks was off 4.34 points or 4.65 percent at 89.09 early on Thursday afternoon, making a loss of over 28 percent for the year to date.