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Sector Snap: Offshore Supply Companies

NEW YORK (AP) -- While suppliers to the offshore oil industry may get a boost from rising energy prices, a slew of new ships entering the market over the next few years could eventually flatten profits as competition rises, according to Citigroup.

Shares of offshore supply vessel have risen significantly since late last year, said analyst Mark Brown, and now the question becomes how much further there is to run.

Higher energy prices will fatten second-quarter results, but Brown says offshore oil drillers are ordering new ships, which could rebalance the market's supply and demand dynamics as early as 2015.

Gulfmark Offshore Inc. will post some of the sector's best second-quarter results and easily beat Wall Street predictions, Brown said, helped by growth its three core markets of the North Sea, Southeast Asia and the Gulf of Mexico.

Brown is predicting a 12-cent beat over the consensus forecasts of a 33-cent per-share profit.

Tidewater Inc., like Gulfmark, is also rated as a 'buy' at Citi thanks in part to and rated it at "Buy," due in part to recent acquisition. Brown predicted a profit of 80 cents per share, which is 4 cents ahead of the analyst average.

There is more cautious regarding Hornbeck Offshore Services Inc. Brown rated Hornbeck's shares at "Buy," but projects a profit of 50 cents per share, 2 cents below the analyst average.

In midday trading, Gulfmark shares edged up 30 cents to $49.38; Tidewater rose $1.08, or 2 percent, to $60.55; and Hornbeck rose 79 cents to $56.72.