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RIG's Record Rate

The writing's been on the hull for a while now.

First there was Petrobras' (NYSE: PBR  ) decision to hire 40 rigs through 2017, in order to plunder its offshore prizes. More recently, there were the new rig orders by Transocean (NYSE: RIG  ) and Atwood Oceanics (NYSE: ATW  ) . We even caught a glimpse of a potentially game-changing pairing in the deepwater.

In short, it should really surprise no one that Transocean has reported a record dayrate on its new five-year contract with Eni (NYSE: E  ) . The contract driller will be pulling down $650,000 per day, slightly edging out the terms of Seadrill's six-year engagement with Petrobras.

The market for deepwater floating rigs remains incredibly tight. Petrobras, in an interesting twist, recently agreed to finance the construction of a new rig, to be operated by Transocean, and lease it for up to 20 years. Contract drillers usually self-finance their newbuild construction programs.

This sort of deal reflects the major, long-term nature of Petrobras' plans. If you read the company's Vision 2020 roadmap, you'll see that Petrobras is poised to become even more of a powerhouse than it is today.

You don't need to invest directly in the big dog, however. From Transocean and Noble (NYSE: NE  ) to FMC Technologies (NYSE: FTI  ) and Oceaneering International (NYSE: OII  ) , there's no shortage of deepwater dance partners. If you're itching to take the dive, it's up to you to get to know the individual firms and find the one with a business model you understand and a future that's brighter than Mr. Market expects. The latter part is getting tougher all the time, and none of these companies is a cheap date. That said, there might be a bargain or two still floating out there.

Atwood is a Stock Advisor recommendation and Petrobras is an Income Investor pick. Dive into any of our Foolish newsletter fare free for 30 days.

Fool contributor Toby Shute has invested in offshore exploration, but doesn't have a position in any company mentioned. The Motley Fool has a deep disclosure policy.

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Related Tickers

10/26/2016 4:02 PM
RIG $10.32 Up +0.29 +2.89%
Transocean CAPS Rating: ****
ATW $8.43 Down -0.02 -0.24%
Atwood Oceanics CAPS Rating: ****
E $29.47 Down -0.21 -0.71%
Eni CAPS Rating: ***
FTI $32.13 Down -0.29 -0.89%
FMC Technologies CAPS Rating: ***
NE $5.70 Up +0.14 +2.52%
Noble CAPS Rating: ****
OII $25.53 Down -0.33 -1.28%
Oceaneering Intern… CAPS Rating: ****
PBR $12.16 Down -0.02 -0.16%
Petroleo Brasileir… CAPS Rating: **