Offshore Drillers starting to look good

[dan_s]

Raymond James team in Houston really likes the offshore drillers.

"The investment community is consumed with debating whether or not North American oilservice EPS estimates need to come down (yes, we are still bullish on N.A.). Meanwhile, the fundamentals for the offshore drillers are quietly improving. We began upgrading the offshore drilling names nearly three months ago and are even more confident in the fundamentals today. Keep in mind that over 95% of all offshore activity is driven by Brent-type pricing, which has yet to fall below $100/bbl and is currently trading near $115/bbl. Given the improving supply/demand fundamentals in the jackup space, we're raising our EPS estimates for the first time in years due to higher dayrate and utilization estimates. While the offshore stocks have recently outperformed relative to U.S. land stocks, we still believe we are in the early stages of a dayrate revival and look for more upside stock performance for this group."