Deep water is proving to be a lucrative place for drilling companies. Ships with the capability to drill farther and farther offshore are being built as quickly as shipyards can make them, and they're being put to work immediately. DryShips
This month, Dryships signed a contract with Petroleo Brasileiro
As oil becomes more difficult to find in shallow water, the market for ultra-deepwater drilling units has exploded. According to Seadrill, 21 units were ordered between October of last year and February, when the company reported earnings. But those rigs won't be completed for a few years, leaving existing operators to reap the rewards now.
With an expanding presence in deep water, Seadrill in particular looks like a good bet for investors. Shares are trading at just 10 times forward earnings estimates and the company pays a 5.5% dividend. Dryships looks even cheaper at just four times next year's estimates, but the company hasn't been known as a great steward of shareholder capital, is still primarily a dry bulk shipper, and doesn't pay a dividend.
Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.
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