What happened

Shares of RigNet (NASDAQ:RNET) bounded higher in March and were up 16.9% for the month, despite a sell-off in the oil market. The reasons RigNet went in the opposite direction as crude, for once, were its solid fourth-quarter report and the deployment of a new system in the Gulf of Mexico.

So what

After sliding for several quarters, RigNet's results finally hit bottom last quarter. Overall, revenue was $52.8 million, which was $2.1 million more than the prior quarter and $0.6 million ahead of the year-ago result. The company benefited from a $2.2 million increase in systems integration and automation revenue during the quarter, due to the timing of projects in that business segment. Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization), likewise, was both higher sequentially and year over year, which gave investors hope that that the worst might be in the rearview mirror.

Oil platform and tanker ship in offshore area at sunset

Image source: Getty Images.

In addition to the earnings boost, RigNet completed the deployment of its first deepwater 4G LTE system in the Gulf of Mexico last month. That launch will ensure that the company can satisfy customers' needs for more data capacity in the future.

One reason that increasing capacity is necessary is the slow improvement in offshore drilling activities. While the rig count in the Gulf is down over the past year, the industry seems to be getting ready to start growing again. An example is BP's (NYSE:BP) decision to finally sanction the long-delayed second phase of its Mad Dog field, which is a $9 billion project. BP expects to drill up to 14 wells in support of that development, which should start producing oil by 2021.

Meanwhile, on a broader scale, the rig count in the Gulf has been on the rise in recent weeks as oil companies start putting more capital to work. Furthermore, looking beyond the U.S., the industry is expected to approve double the number of major capital projects this year, which should drive future demand for communication services.

Now what

For the first time in a while, RigNet investors have a reason for optimism. Not only have the company's financial results finally started to turn the corner, but there is also increasing clarity that future results could continue to improve. That said, given the higher costs of offshore drilling, the recent wobbling in oil prices, and the financial woes of several drilling contractors, investors shouldn't expect smooth sailing just yet.

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