Did you catch the rig explosion in the Gulf of Mexico today?
Some people did. And, possibly thinking it was another BP (BP) blowout, they sold the shares of the owner of the facility — Mariner Energy (ME) — down nearly 20% before details emerged suggesting the explosion wasn’t that big and not even near on the order of what hit Transocean’s (RIG) Deepwater Horizon rig in April and killed 11 workers.
It’s not clear what set off the explosion. Mariner officials suggested initially that it occured while workers were painting and sandblasting.
Mariner’s shares had recovered nearly all of their loss and were off 2.4% to $22.80 at 3:38 p.m. ET.
What apparently did happen was that a fire broke out on the Mariner’s Vermilion Rig 360, a production platform operating in the Gulf of Mexico about 90 miles south of Vermilion Bay in central Louisiana. Thirteen workers were aboard the platform at the time. All have been rescued; one was injured.
The workers were believed to have shut in the seven wells serviced by the production platform. But that has not yet been confirmed.
While Mariner spokesman Patrick Cassidy told CNBC that there was no evidence of a spill or a sheen on the surface of the Gulf, the Coast Guard said this afternoon there appeared to a mile-long sheen spreading out from the rig.
The incident highlights the confusion many people have about a production platform and a drilling rig. A production platform is installed to produce oil and gas whose wells have been drilled and set up with pipe and concrete casings.
Mariner’s platform is in 340 feet of water. The Deepwater Horizon platform was drilling a well in 5,000 feet of water south of New Orleans.
It’s not clear what set off the fire. Workers were sanding and painting the top decks of the platform at the time of the incident, Cassidy said.
The platform is a fixed petroleum platform that was in production at the time of the fire, The Associated Press said. The platform was producing about 58,800 gallons of oil and 900,000 cubic feet of gas per day. The platform can store 4,200 gallons of oil.
Mariner is an oil and gas production company with assets in the Gulf of Mexico and in the Permian Basin in West Texas. It had revenue of $942 million in 2009 and reported a loss of $581.4 million. Excluding one-time charges, it earned $21 million, or 22 cents a share. Operating cash flow was $531 million.
Its largest shareholder is Paulson & Co., the hedge fund operator, which owns 9.7% of the shares.
The company has agreed to a $2.7 billion buyout offer from Apache (APA). The cash-and-stock deal is valued at $26.22.
Apache was off 1.6% to $91.
The Deepwater Horizon incident set off the largest oil spill in U.S. history and caused the Obama administration to impose a moratorium on new deep-water wells in the Gulf. The oil industry has sued, trying to get the ban lifted.
Because the Vermilion rig was already producing oil, it wasn’t affected by the moratorium.