Oil Production Outlook is Bright: Drilling companies are rebounding over the last twelve months due to the improvement in oil prices and the increasing investments from exploration and production companies. The rally in drilling companies’ shares accelerated since OPEC and non-OPEC producers announced to expand their oil output from the second half of this year.
North American and Canadian producers have also been aggressively working on expanding their production potential. Sanctions on Iran, along with increasing oil prices and strengthening demand, pushed producers to pump more oil.
Saudi Energy Minister Khalid al-Falih recently warned that the world is likely to experience an oil supply deficit of 1.8 million bpd during the second half this year.
Oil Production Outlook is Bright: Drillers are Enjoying Production Plans
Drilling companies’ shares are moving higher, driven by the expectation for higher exploration and production activities. The drilling industry is up 7.5% year-to-date, pushing the twelve-month gains to 17%.
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Diamond Offshore Drilling (NYSE:DO) shares jumped 5% in the latest trading session, moving the twelve-month rally to 100%. Its CEO is optimistic about the future fundamentals of the drilling industry.
He says, “We have secured additional work for the Ocean BlackRhino and the Ocean Apex, and we were also awarded new work for the Ocean Endeavor. We expect additional contracts in the days to come from prospective clients for our industry-leading fleet.”
Ensco PLC (NYSE:ESV) shares grew 52% in the last three months alone. Ensco has won several new contracts in the first quarter, and the company expects significant growth in its backlog during the second half of this year. The company has achieved 99% operational utilization across its rig fleet in the latest quarter and its safety metrics are in line with company records. Its CEO Mr. Trowell says, “We will continue to act opportunistically to best position Ensco to capitalize on improving market conditions and create meaningful long-term value for our investors.”
Featured Image: Depositphotos/© AndrCGS
