You know about the tremendous increases in hydrocarbons production that have been generated onshore in just the past few years in the primary U.S. oil-centric unconventional plays. I’m referring primarily to the prolific Eagle Ford of south Texas, North Dakota’s Bakken/Three Forks, and the rejuvenated Permian Basin, which essentially straddles the lower border between Texas and New Mexico.
Nevertheless, it’s likely that in the future, the biggest discoveries of black gold will occur in progressively deeper offshore waters. I’m referring to the likes of the Gulf of Mexico — which was once thought to be on the road to depletion — Brazil’s Santos Basin, the Cuanza Basin offshore Angola, the South China Sea, and potentially the Kara Sea of the Russian Arctic.
The offshore energy opportunities
From the perspective of how to play this expanding trend, there are a number of international oil companies that might fit the bill. For instance, unless the Russians return to their devious ways, Exxon Mobil Corporation (NYSE:XOM) will operate in the Kara and Black seas through a newly hatched joint venture with state-controlled Rosneft.
And there’s very little drilling that occurs on our planet that doesn’t involve oilfield-services leader Schlumberger Limited. (NYSE:SLB) in some form or fashion. But from my perspective, it makes eminently good sense to become familiar with the deepwater drillers, such as Transocean LTD (NYSE:RIG) and Diamond Offshore Drilling Inc (NYSE:DO) .
In the interest of full disclosure, I must admit to currently owning Transocean shares and to having served, as a wee lad, as a junior officer of a predecessor company of Diamond. So with those admissions as a backdrop, let’s take a quick gander at two of the world’s largest offshore drillers. Each has its own strengths, and, given the increasing tendency for oil and gas producers to splash around offshore, neither is likely to follow the fate of buggy-whip manufacturers during any of our lifetimes.
Transocean’s bevy of big rigs
Swiss-based Transocean LTD (NYSE:RIG) is the largest of the deepwater drillers, with 82 rigs under its at least partial ownership and operation. Fully 27 of the units are classified as “ultra-deepwater,” meaning they’re capable of plying their trade in water depths of 7,500 feet or more. Another 14 are “deepwater” rigs, meaning that they typically operate between 4,500- and 7,500-foot depths. The rest of the fleet consists of harsh-environment rigs, midwater floaters, and jackups — both standard and high-specification types.
The company currently has at least five rigs working offshore Angola, Brazil, India, Malaysia, Nigeria, the North Sea, Norway, and the U.S. Gulf of Mexico. The last-mentioned locale leads the pack, with 15 busy Transocean rigs.