Dip in Drilling Demand? Doubtful.

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Judging by the share price droop of drillers like Nabors Industries (NYSE: NBR) and Atwood Oceanics (NYSE: ATW) in recent months, you'd think that all the drillbits had suddenly stopped turning.

The reality is far different. Orders for newbuild rigs keep piling in. Contract awards keep running longer, and at higher dayrates. Even the Big Oil-bashing party in Congress proposed some offshore drilling measures this week. Drilling is still in, my Foolish friends.

There were a few notable deals this week.

First, contractor/manufacturer Rowan (NYSE: RDC) announced that it's building four new land rigs for enticing EnCana (NYSE: ECA). That's in addition to a soon-to-be-delivered rig that EnCana is also grabbing. Given the horsepower on these puppies, I would imagine that at least a few are headed for east Texas, where EnCana's Deep Bossier wells are blowing the doors off. Analysts were skeptical of this play at first, but the Amoruso Field is generating some of the highest initial production rates in North America. If it seems that I digress, remember that the drillers benefit from this sort of success.

EnCana's rig request -- with all five sporting three-year contracts -- reinforces what we've seen elsewhere, namely the torrent of orders over at horizontal hotshot Helmerich & Payne (NYSE: HP). There's ample evidence that resource play pros will continue to demand a lot of iron -- for extensive shale plays in particular.

Things remain buoyant offshore as well. Pride International (NYSE: PDE) landed a solid gig this week for one of its lowest-capability semisubmersibles -- a mid-'70s vintage model that can handle water depths of only a thousand feet. The Sea Explorer, currently working off the coast of Congo at $255,000 a day, has signed on for a two-year stint in Brazil at a rate of $334,000 per day. To get a sense of how far this market has come, that rate comes close to matching what ENSCO International (NYSE: ESV) is getting on a newbuild 8,500-footer, to be delivered next year. That contract was signed in January 2006.

Given the obvious strength in both rates and demand for new rigs, I believe that recent market weakness has presented some real bargains among the contract drillers.

Related Foolishness:

• Catch the conclusion to this onshore consolidation saga.
• This driller needs to make a move.
• Dividends, eh? Here's a very different offshore driller.