Why the Offshore Drilling Recovery Is Real
After several years of declines, the offshore drilling market is on track to see its first annual increase in investment spending since crude oil prices started tanking in 2014. The industry's rebound should continue for several years, even though oil prices remain volatile. That was a clear takeaway from the comments of management teams across the sector during the second quarter. Here's why they believe that this recovery is for real.
Leading offshore drilling contractor Transocean (NYSE: RIG) was one of several companies seeing notable improvements in the market. CEO Jeremy Thigpen ran through some key trends on the company's recent second-quarter call:
[W]e're extremely pleased with the direction of the high specification harsh environment market where our top tier assets are fully utilized. Day rates are approaching and, in some cases, exceeding $400,000 per day. ... And while we're somewhat frustrated with the pace and trajectory of the ultra-deepwater market, we remind ourselves that we have moved off the bottom and are clearly in the early stages of what we expect will be a much broader recovery. ... We have spent the last several years positioning ourselves [for this recovery] by establishing the offshore drilling industry's largest and most profitable backlog, providing us with unparalleled visibility to future cash flows.
Source Fool.com
