What happened

Shares of Oceaneering International (NYSE:OII) surged nearly 12% by 10:45 a.m. EDT on Tuesday after the offshore-focused oil services company posted better-than-expected first-quarter results.

So what

Oceaneering International hauled in $493.9 million in revenue during the first quarter. That was 19% higher than the year-ago period thanks to strong results in three of its five operating segments. While the company reported an adjusted net loss of $23.9 million, or $0.24 per share, that was an improvement from last year's first quarter and a whopping $0.21 per share better than the consensus estimate. It benefited from higher-than-expected activity levels and good execution within its energy-focused businesses during the quarter.

Silhouette of an offshore oil drilling rig at sunset.

Image source: Getty Images.

That stronger-than-anticipated start to the year, when combined with its expectations for further improvement in the coming quarters, led Oceaneering to narrow its guidance for adjusted EBITDA. The company now sees its underlying earnings ranging between $150 million and $180 million for the full year, a $10 million increase at the low end of that forecast.

Now what

The offshore drilling market is finally starting to bounce back after years of decline thanks to a combination of higher oil prices and falling costs. That improvement should become even more apparent as recently approved drilling projects ramp up, which should drive increased activity in Oceaneering's subsea products segment during the second half. That trend could continue for the next several years given the outlook that offshore investment and activity levels will expand at a 9% compound annual growth rate through 2021, according to a forecast by analysts at Rystad Energy.

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