Out Fox The $treet

Ensco completed a surprise secondary, sending the stock down sharply. The offshore driller continues to easily surpass estimates due to strong operations during the severe downturn. The company has improved the balance sheet after completing a below-market debt offering making the stock trading far below book value appealing to new investors. In an interesting move,  Ensco (NYSE: ESV )  placed a secondary offering to raise cash to cover corporate needs during this downturn in offshore drilling. The offering is somewhat peculiar considering analysts forecast the company remaining profitable even in 2017, but the news follows a similar amount spent to repurchase debt at a large discount. Read the full article at Seeking Alpha.  Disclosure: No position mentioned. Please review the disclaimer page for more details. 

Summary ConocoPhillips announces small hike in the dividend. The E&P firm cancels a ultra-deepwater drillship contract with high termination fees. The stock is hitting new oils due to the company protecting the dividend while oil prices head lower.    While a lot of comments don't agree with my previous points on the dividends paid by ConocoPhillips (NYSE: COP ) , the latest news again backs up my claims. The exploration and production firm made another bizarre move based on protecting the dividend at the expense of prudent financial moves.  Read the full article on Seeking Alpha .  Disclosure: No positions mentioned. Please read the disclaimer page for more details .

For the first quarter, Transocean Ltd ( NYSE: RIG     ) generated earnings that smashed analyst estimates. The offshore driller, which has struggled since the Macondo accident and is plagued with old rigs, put together one of the best quarters in years. For offshore drillers, two key metrics dictate the level of profits: revenue efficiency and fleet utilization. In the case of Transocean, revenue efficiency hit 95.7% to reach the highest level since 2008. Fleet utilization is still struggling at 78%, but the level is high enough to produce huge profits. Read full article here . Disclosure: No positions mentioned. Please read this disclaimer page for more details.

Over the last several months, several analysts have come out with dire warnings of a further plunge in shares of deepwater drillers. The market, which had already soured on the sector from several warnings of a pause in demand for offshore drilling in the deepest areas, is questioning the timing of the analyst calls. The cyclical offshore-drilling market faces an interesting dynamic of customers rethinking capital projects while oil and natural gas prices sit near recent highs. On top of that dynamic, a bifurcation is occurring in the market where the newest high-specification rigs remain in solid demand while the oldest rigs face idle time and the potential for being cold-stacked or dismantled. Read the full article here . Disclosure: Long SDRL. Please review the disclaimer page for more details. 

The debate over the current slowdown in the deepwater market covers a wide range of opinion regarding the duration and impact. Regardless of an investor's ultimate opinion, the offshore drilling sector always faces cyclical troughs and peaks. The key is the ability of the driller to take advantage of weakness and thrive during the following rebound. In the case of Transocean ( NYSE: RIG     ), the company is the largest deepwater driller with 79 rigs in total and 46 of those listed as either deepwater, ultra-deepwater, or harsh environment. The deepwater specialist is now facing a bifurcated market that it is quickly finding itself on the wrong side of the contract ledger. On top of that, Carl Icahn is pressing the company for changes, but his actions can't fight industry momentum. Idled rigs in a weak market might is never a good thing, but will the stock continue to plunge? Read the full article here . Disclosure: No positions mentioned. Please review t...

As the Mexican government moves to reform the slumping energy industry, a whole slew of firms in the US stand to benefit. According to a Merrill Lynch report  , analysts estimate that Mexico spent about $8 billion on drilling and completion (D&C) services in 2012 and expect that number to jump another $2.5 billion in the next two years. Merrill Lynch lists a slew of stocks that will benefit from the hydrocarbon surge in Mexico. The firms include the typical large oil service and equipment providers, as well as offshore drilling specialists. Remember that a prime reason for the decline in oil output from Mexico has been a lack of expertise in drilling complicated offshore wells. While this might be a scenario where a rising ship raises all boats, a few stocks stand out to benefit the most. Read the full article here . Disclosure: Long WFT. Please review the disclaimer page for more details. 

Whether directly or indirectly, the aggressive newbuild program at Seadrill ( SDRL ) could benefit the most from the potential opening up of Mexico to international oil service firms. While still too early to get overly excited, Merrill Lynch suggests the potential is for Mexico to add 50 onshore rigs and 20 floaters in the next two years to pull the struggling industry out of decline. Seadrill is a leading offshore deepwater drilling expert with a fleet of drillships, jack-up rigs and semi-submersible rigs operating in Northern Europe, U.S. Gulf of Mexico, Mexico, South America, West Africa, Middle East and Southeast Asia. The company owns positions in numerous other drilling oil services firms including 75.7% of Seadrill Partners ( SDLP ) that alone is worth nearly $1 billion. Read the full article on Seeking Alpha. Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

Prior to June 5, Helmerich & Payne (NYSE: HP ) was seen as a solidly run contract drilling firm with a small dividend. The company made a surprising announcement that it would dramatically increase the yield making the stock interesting for the yield now. Or maybe it wasn’t that surprising considering the expected influx of cash and a strong balance sheet. The company operates primarily as a contract drilling firm with more » Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

While investors remain focused on surging domestic oil production, the market is missing that global oil prices remain high. With Brent trading over $100, the deepwater drillers provide attractive investment options with PE ratios below 10. Some of the leading drillers include Ensco (NYSE: ESV ) , Noble (NYSE: NE ) , and Atwood Oceanics (NYSE: ATW ) along with speculative Pacific Drilling (NYSE: PACD ) .  Other investors may prefer the high yielding SeaDrill Limited or more » Disclosure: Long ATW. Please review the disclaimer page for more details. 

Anybody following the offshore drilling market knows that CEO Fredrik Halvorsen of Seadrill Limited ( SDRL ) is an aggressive operator. Not only does the company pay substantial dividends unlike the competition, but it also continuously wheels and deals rigs, divisions, and subsidiaries. The company is a leading offshore deepwater drilling expert with a fleet of drillships, jack-up rigs, and semi-submersible rigs operating in Northern Europe, U.S. Gulf of Mexico, Mexico, South America, West Africa, Middle East, and Southeast Asia. The company owns positions in numerous other drilling oil services firms including 75.7% of Seadrill Partners ( SDLP ) that alone is worth nearly $1 billion. Read the full article at Seeking Alpha. Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

It used to be that growth stocks traded at 1x the earnings growth rate. A stock growing at 10% with earnings forecasted at $2 would trade at $20 and in some cases up to 2x that growth rate. In the current climate a stock such as Atwood Oceanics (NYSE: ATW ) can trade at virtually half the growth rate. The company is an under-the-radar global offshore deepwater drilling contractor engaged in more » Disclosure: Long ATW. Please review the disclaimer page for more details. 

As the deepwater drilling market rebounds strongly, it remains interesting that the once unquestioned leader continues to struggle. After all, the company even uses deepwater.com for their official website. Everybody knows that Transocean (RIG) has been hit hard since the Macondo accident back in April 2010. While that incident initially set the company back, the stock rebounded sharply at the end of 2010 and the start of 2011. Investors buying the stock though weren't paying attention to their aging fleet. The company engages in offshore contract drilling services for oil and gas wells worldwide with a primary focus on deepwater and harsh environment drilling. Read the full article at Seeking Alpha. Disclosure: Long ATW. Please review the disclaimer page for more details. 

On Monday, Seadrill (SDRL) highlighted on the Q2 earnings call that deepwater drilling remains a very hot sector with limited available rigs for the next couple of years. This was a theme highlighted at the beginning of the year as drilling in the Gulf of Mexico had picked back up. The company provides offshore drilling services to the oil and gas industry worldwide. Its services include drilling, completion, and maintenance of offshore wells; production drilling and well maintenance; and well services. The company owns a fleet of offshore rigs and has 18 new builds under construction. While the adjusted earnings slightly missed estimates, Seadrill continues to see huge demand for its rigs and tightness in the market for the next few years. The company has one of the youngest fleets in the industry and continues to benefit from an aggressive new build program. Read the full article at Seeking Alpha. Disclosure: Long ATW. Please review the disclaimer page for more details.

Raise your hand if you realized that by early 2012 there will be more deepwater rigs in the Gulf of Mexico than when the BP spill occurred. According to ODS-Petrodata, 40 deepwater rigs will be in the Gulf compared to 37 before the spill. As an investor and especially one that has invested in the sector, this news caught my attention as something the general investing public doesn't understand yet. So what stocks will be able to take advantage of this trend in 2012? First, companies that focus on drilling deepwater wells in the Gulf could benefit the most with the rising demand and possibly less competition as many rigs fled the area. Second, any companies in the deepwater segment should benefit with rising sector demand and higher global utilization lifting all day rates regardless of location. Read the full article at Seeking Alpha. Disclosure: Long ATW. Please review the disclaimer page for more details.