‘Bolt jolt’ may have raised drilling industry concerns, but Wall Street eyebrows? Barely.

The lowly bolt is rarely considered an exciting or controversial subject.  We largely ignore them in the assumption they will do their job of fastening together two pieces of wood, steel, ceramic or other materials in our cars, homes and  equipment.

So when reports began to widely circulate last week that the US Bureau of Safety and Environmental Enforcement, and separately also General Electric Oil & Gas, had asked drillers to inspect and replace any defective bolts used on GE-manufactured H-4 connectors, it seemed like potentially a Big Deal.  After all, we’re less than three years out from the US’ biggest marine oil spill which erupted from the BP-operated Macondo well in the Gulf of Mexico in April 2010, and ensuring safe rigs and equipment has become the top priority of all operators there.

So at first it was a surprise to see that analysts were fairly unruffled by what Jefferies analyst Brad Handler called the “bolt from the deep blue.”   It seemed logical to assume that under pressure, a faulty bolt could in theory come loose, put added stress on its fellow bolts and also stress the connectors — which join the wellhead or lower marine riser package to the blowout preventer stack — and create the potential for disaster.  And as we know, blowout preventer failure is what caused about the leak of about 4.9 million barrels of oil, most of it into the Gulf of Mexico, during the three months before Macondo was capped in mid-July 2010.

But even if catastrophe weren’t the main concern, the hassle — not to mention potential revenue losses on rigs whose high-dollar work would be halted to swap out bad bolts for fresh ones — might have raised analysts’ eyebrows.  Deepwater rigs — the ones using the H-4 connectors on subsea equipment — can fetch upward of $600,000/day, and the week or more that was figured to be required for change-outs could therefore cost a painful $4-$5 million per rig.

For the 24 Gulf of Mexico floating rigs that were identified as possibly carrying the faulty bolts, even though these made up not quite a third of the 83 total rigs in the region, the math suggests a not-inexpensive problem.

But Wait! — as they say in late-night infomercials.  Maybe the situation wasn’t quite as dire as at first glance.  Of the 24 rigs identified as using the H-4 connectors, six were already cleared to return to activities by the time the bolt issue began to be widely reported February 5.

The remaining 18 rigs were classified in ways that suggested no crisis was at hand:  either the rigs were performing work that didn’t require a BOP, or were inspecting the bolts and obtaining 3rd party verification on them, or working to reach a safe point in their operations where they could stop and pull the BOP for inspection.

Neither BSEE nor GE could identify how many of the 18 rigs had actually stopped drilling activities to replace bolts. But Wall Street, which closely follows drillers in the US Gulf with an eye to their investment value, seemed to adopt a cautious calm and saw no immediate cause for alarm.

“Reality of post-Macondo world that news headlines involving Gulf of Mexico rig equipment/component problems still evoke flinching instinct,” observed investment bank Tudor Pickering Holt in its usual staccato writing style.

TPH added that it would be “too simplistic (and unfair to offshore drillers) to … let worst-case scenario machinations run wild.”  Letting logic rule the day, TPH opined — largely lining up with its peers — that the bolt issue’s “bark is worse than its bite” for the collective impact on offshore drillers’ earnings.

Analysts at TPH and elsewhere said that under certain scenarios the bolts might need a single day to replace, or more than a week under less-ideal conditions.  But given the relatively restricted number of rigs and time frames, and the possibility that some operators might be able to replace the bolts during normal downtimes or routine maintenance, the overall landing might be fairly soft, experts said.

“We believe the downtime would be limited and can often mitigated through the course of normal operations,” Barclays analyst James West said in a note.

In addition, Handler said that it shouldn’t be assumed that offshore drillers have no contract coverage for their downtime.   “We gather from our channel checks [that] is almost certainly not true,” he said last week.