What: Shares of Atwood Oceanics (NYSE:ATW) declined 10% by 3:00 p.m. ET today following the announcement that it had been removed from the S&P MidCap 400 Index and put on the S&P SmallCap 600 -- and some analyst notes.

So what: Let's start with Atwoods move to the Small Cap index. Whenever changes to indexes happen, you're going to see a bunch of trading by index funds that track said indexes. In reality, though, things like this don't have any long-term impact on what the company is doing, or what the future holds. Rather, it's more of a reflection of the sentiment that investors have for Atwood and offshore drillers in general -- which isn't good at all.

This was pretty apparent when analysts at Cowen basically said they see "No Compelling Reason to Invest" in offshore drilling companies any time soon. In the note, the analysts see the glut of offshore rigs lasting through 2018, and longer if oil and gas prices remain depressed as they have. This isn't anything new when looking at the prospects of Atwood or any other rig owner. A mad dash to invest in new rigs 3 to 5 years ago means several are coming online now while, older ones remain under contract. Until those older ones come off contract and head for the scrap yard, and until we see a pickup in drilling activity, this will continue to be the case.

Now what: Prior to the downturn in oil prices, Atwood was looking like a pretty compelling investment. It had a pretty new fleet of rigs and a very manageable balance sheet compared to some of its peers. Even with a decent balance sheet, though, the market is going to punish any company in the offshore rig space.

While these two things shouldn't really alter the investment thesis on Atwood, it's very clear that anyone invested in the company may need to wait a long time before reaping any sort of reward.