I'm so happy to see the offshore drillers selling off with the rest of the energy sector this past month.
No, I'm not being sarcastic again. I really mean it -- I'm thrilled!
I've been praising these contract drillers for well over a year now, yet I haven't gotten around to actually buying shares. If you haven't either, it's time to get greedy.
Why? Just look at the comments from ENSCO International
The company's current cash creator is mainly its high-quality fleet of jackup rigs, which operate in relatively shallow water. Dayrates strengthened a tad, and utilization was a dreamy 95%. For now, ENSCO has only one deepwater asset, working for Chevron
Let's go back to the shallow water for a moment. So many jackups have fled the Gulf of Mexico, locally known as the Dead Sea, that ENSCO's pricing power has begun to strengthen there. Further, the company notes that it put in the effort to maintain and upgrade its fleet before the market upturn, and competitors with old iron may find it prohibitively expensive to put the money in at this point in the cycle. That spells attrition, and it means more share for ENSCO in an increasingly busy basin.
As for the deepwater, ENSCO has certainly seen the light. Along with Atwood Oceanics
Blistering demand meets finite supply. Feeling greedy yet?
Hercules Offshore is a Motley Fool Hidden Gems pick. Atwood is a Stock Advisor selection. Last but not least, Petrobras is an Income Investor recommendation. Dive into any of our Foolish newsletter services free for 30 days.