The news on Monday that the offshore drilling giant Ensco will buy a rival, Pride International, for $7.3 billion is only the latest sign of a bright future for offshore drilling.
It’s an optimistic outlook for an industry that only a year ago was marred by the disastrous oil spill in the Gulf of Mexico, an accident that “left 11 dead, poured millions of barrels of crude into the sea and put the country’s deepwater drilling on hold,” colleague Clifford Kraus writes on the New York Times’s Green blog.
Combining the two companies creates a global behemoth, and stock shares of other drillers are rising in anticipation of an industrywide consolidation that will enable several companies to invest vast amounts of money in prospecting in complex deepwater fields, especially off the shores of South America and Africa.
What else tells of drilling boom ahead?
As Eurasia Group noted in a recent research note, drilling companies since November have ordered or are preparing to contract for construction of 18 rigs capable of operating in deep waters. That is the fastest buildup since 2007, when oil prices were galloping and few in the industry were anticipating the virtual collapse in energy demand in 2009.