In the deepwater kingdom, the driller with a contract in hand is king. That's why, even with crude oil prices pushing up against all-time highs, investors were perhaps a bit nervous to see GlobalSantaFe (NYSE:GSF) announce a speculative ("spec") newbuild order on Monday.

Availability of deepwater semisubmersibles and drillships is extremely limited through 2009, enough so that major operators like BP (NYSE:BP) and Chevron (NYSE:CVX) have been perfectly willing to sign big multi-year contracts that pay back the driller's building costs. Transocean (NYSE:RIG), for example, booked a biggie with BP back in June.

Whatever the reason, GlobalSantaFe was unable to secure a commitment from an upstream explorer this time around. Because it's confident about the ongoing strength of the deepwater exploration market, GlobalSantaFe is laying out roughly $740 million for a shiny new drillship. This will be an enhanced version of two older ships that are presently working for BHP Billiton (NYSE:BHP) and Total (NYSE:TOT).

Longtime Fools may recall that one of GlobalSantaFe's predecessor companies was leading the spec build charge back in 2001. But that was a different company, and a different time. Santa Fe International had no debt, a pile of cash, and shipyard costs that were a fraction of what they are today. In hindsight, the decision to build counter-cyclically, and on spec, was a sound one. The old argument against peak-cycle spec building has not been rendered altogether quaint.

I don't intend to sound alarmist. Based on leading dayrates and strong bidding interest in recent lease sales, the odds are extremely high that GlobalSantaFe will land a full payout contract before the new drillship is delivered in 2010. Nevertheless, it's an aggressive move, mirroring the likes of swashbuckling Seadrill. Another firm, Ensco International (NYSE:ESV) has taken to building "spec" floaters as well, but those cost mavens appear to be generating superior returns on invested capital. I don't think this approach suits GlobalSantaFe particularly well.

I'll leave you with this quote from Bob Rose, GlobalSantaFe's chairman, from 2001:

When you are in a capital intensive, cyclical business, the most important decisions you make are your capital decisions. When you are committing hundreds of millions of dollars, you better be sure you are going to get a return on it. The best way to ensure that return is to have somebody contract to use it before you build it.

Related Foolishness:

  • In case you missed it, GlobalSantaFe and Transocean are getting hitched.
  • Wall Street is none too enthused about the shallow water drillers.
  • Ensco in particular has been scolded for lightening up its third-quarter guidance.

Fool contributor Toby Shute doesn't have a position in any company mentioned. Total is a Motley Fool Income Investor recommendation. The Motley Fool has a disclosure policy.