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What: Shares of Atwood Oceanics (NYSE:ATW) plunged 16% by 11:15 a.m. ET on Friday. There were a lot of concerns weighing the stock down, including oil prices, Seadrill's (NYSE:SDRL) market outlook, and the latest market meltdown.

So what: The price of crude resumed its slide today, with the global benchmark Brent price falling 4% to just over $29.50 a barrel by 11:00 a.m. ET. That weakness is one of the major weights pulling down the market today -- and offshore drillers, in particular.

The price of crude continues to cast a somber mood on the offshore space. Because oil is so low right now, Seadrill CEO Per Wulff said yesterday that he sees the challenging market conditions persisting through 2017. That's because oil companies simply have no economic incentive to drill offshore and likely won't regain that appetite for 12 to 15 months after the price of oil normalizes. That outlook, as well as the current price weakness, will likely push drilling rig dayrates below breakeven levels in the coming year, according to Wulff. It's one reason Seadrill announced earlier this morning that it would push back the delivery of two of its newbuild drilling rigs for two more years, not taking delivery until 2018 and 2019.  

Falling dayrates are a big concern for Atwood Oceanics because it has a number of drilling rigs with expiring contracts in 2016. As such, it will either have to take whatever dayrate it can get to keep these rigs working or idle them until conditions improve. Neither option is optimal, with both likely resulting in weaker revenue and earnings. 

Now what: Offshore drillers are facing brutal market conditions right now, with no sign on the horizon that conditions will improve. In fact, there is a very real possibility that conditions could get much worse because so many rigs are going off contract in 2016. That suggests that a lot more volatility could be coming for these offshore drillers.

Matt DiLallo owns shares of Seadrill. The Motley Fool owns shares of and recommends Atwood Oceanics. The Motley Fool recommends Seadrill. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.