Oil prices may bounce around $70 and natural gas prices might spasm with the weather, but at least one general truth about the energy market is still holding form -- more companies are wading offshore to look for energy. And they're paying companies like GlobalSantaFe
This is all getting kinda routine now, especially after looking at the likes of Transocean
Although the big worry now is that capacity will exceed demand in a few years and bring this party to a crashing end, I wonder just how swift and nasty that will be. After all, plenty of companies are bringing in the cash today, but there isn't a lot of newbuild activity. Sure, there is some, but most of the larger publicly traded companies seem unwilling to spend cash on new equipment without a contract in place to guarantee some returns on that investment. Instead, a lot of that cash is going back into the stock market through share repurchases.
Obviously, that doesn't guarantee anything. But another mark in Global's favor is that offshore energy production doesn't really have the mom-and-pop operators like on-shore drilling. While there are certainly land drillers who rely on checkbook operators for a significant portion of their business, most of GlobalSantaFe's business comes from companies like BP
That said, a lot of Global's business is from jack-ups, and that's a somewhat more volatile subsection of offshore drilling. While most of these stocks will likely continue to track overall sentiment on energy services, it's still probably worth taking a look at ENSCO
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).