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ENSCO PLC (ESV), Noble Energy, Inc. (NBL): As Brent Stays Over $100, the Deepwater Drillers Remain Attractive

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 PLC (NYSE:ESV) , Noble Energy, Inc. (NYSE:NBL), and Atwood Oceanics, Inc. (NYSE:ATW) along with speculative Pacific Drilling SA (NYSE:PACD). Other investors may prefer the high yielding SeaDrill Limited or the well-known Transocean LTD (NYSE:RIG), but this article will focus on those stocks not as well known by thegeneral investing public.


Underfollowed large cap

By all accounts whether by volume or followers on popular financial websites, ENSCO PLC (NYSE:ESV) remains a underfollowed driller. The company has a market cap of $14.6 billion with revenue expected to surge 18% this year to nearly $5.1 billion. The stock trades at just under 10 times this years earnings with a record backlog of $12 billion.

ENSCO PLC (NYSE:ESV) has seven rigs under construction that are scheduled for delivery over the next two years. The company has been aggressive in adding rigs with three floating rigs added to the fleet during Q113. Combined rig utilization was only 86% in the last quarter providing some upside efficiency potential in the future. With a 3.2% dividend yield, the stock also pays investors to wait.

Another large cap

Noble Energy, Inc. (NYSE:NBL) is another large cap offshore driller mostly ignored by the market in favor of the well-known Transocean. The company has a market cap over $10 billion and provides a small 1.3% dividend yield. With surging revenue growth in the 20% range, analysts expect earnings to surge from $2 in 2012 to $4.50 in 2014.

The company has a fleet of 79 offshore drilling rigs including five ultra-deepwater drillships and six high-specification jackup drilling rigs under construction.

Hardly noticed mid cap

Atwood Oceanics has long been the forgotten stock in the deepwater drilling sector. Over the last couple of years, the sleepy company undertook an aggressive newbuild program that will double the fleet when complete. Currently, the company has 13 mobile offshore drilling units and is constructing three ultra-deepwater drillships.

Due to recent commencements of new jackups and deepwater drillships, revenue is expected to surge 33% this year to just over $1.0 billion. Earnings likewise should jump to $5.11 with a further increase to $6.08 in 2014.

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