NEW YORK (AP) -- Shares of drilling companies tumbled Thursday, driven by a weak second-quarter forecast from Key Energy Services Inc.
Key said Wednesday that it expects revenue from continuing operations to increase 5 to 7 percent, down from a previous outlook for 10 to 15 percent growth. It sees earnings from continuing operations of 18 to 20 cents per share, down from 31 to 33 cents per share previously.
Key cut its expectations due to lower-than-expected liquid shale activity and low natural gas prices. It said conditions could get worse than customers are currently signaling.
Judson E. Bailey, an analyst with International Strategy & Investment Group, agrees. In a research note, he said the lower guidance underscores his view that U.S. activity levels and pricing are beginning to weaken beyond already low expectations. The analyst expects "significant" earnings reductions for North American drillers.
Key Energy shares fell almost 18 percent on Thursday to close at $8.04. During the trading session the stock hit $7.88, its lowest point since late 2010.
Elsewhere in the sector, Noble Energy Corp. fell $3.26, or 3.9 percent, to $79.39. Transocean Ltd. fell $2.83, or 6.2 percent, to $42.50 and Diamond Offshore Drilling Inc. gave up $2.91, or 4.8 percent, to $57.61.