Shares of drilling contractors rose Friday as crude prices turned sharply higher and investors cheered strong earnings from a number of key companies.
The Philadelphia Oil Service Sector Index rose 1.8 percent to 312.54 in early afternoon trading. The broader market edged modestly higher, with the Dow Jones industrial average up 0.1 percent to 13,025.15.
Oil prices surged back above $116 a barrel after Turkish warplanes bombed Kurdish rebel bases inside Iraq, stoking fears that Middle East supplies could be disrupted. Light, sweet crude for June delivery rose $3.60 to $116.12 a barrel on the New York Mercantile Exchange.
Shares of Hercules Offshore Inc. rose more than 4 percent a day after the company said its first-quarter profit dropped 87 percent but still beat analysts' estimates.
Morgan Keegan analyst J. Michael Drickamer raised his earnings forecasts on the company and said "long-term investors should continue to buy Hercules opportunistically." Hercules shares rose $1.11, or 4.2 percent, to $27.60.
Pride International Inc. rose a day after the rig operator said its first-quarter profit more than doubled, thanks in part to a big one-time gain. The results were better than analysts expected.
Dahlman Rose analyst Omar Nokta raised his rating on Pride to "Buy" and his target price to $50, citing the company's "impressive backlog, growth profile and discount to net asset value." Drickamer also raised his earnings forecasts on the company.
Pride shares rose 78 cents to $42.28.
Analysts also were bullish about Patterson-UTI Energy Inc., which a day earlier said profits dropped but met Wall Street forecasts.
Lehman Brothers analyst James West was among the industry observers who raised their earnings estimates on the company. He also raised his price target on the stock to $34 to $28.
"We believe that Patterson's mid-depth-focused drilling fleet should benefit significantly as the U.S. land drilling market improves. The company has a strong balance sheet with virtually no debt," he said in a client note.
Patterson shares rose $1.04, or 3.7 percent, to $28.98.
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