The story at offshore driller Noble Corp. (NE) continues to get better for investors.
Aside from the firm’s proposed spilt — which will separate the company into deep- and shallow-water drillers — Noble is already the largest and most active offshore driller in Mexico. Partnering PEMEX, NE has 11 jackup rigs operating in the Bay of Campeche. That number could explode upwards as energy liberalization takes place.
Analysts estimates that only 552 wells have been drilled off the coast of Mexico during the last 10 years. That compares to more than 4,600 tapped in the U.S. portion of the Gulf of Mexico. Given that Mexico’s holdings of the waterway feature similar geology and hydrocarbon pockets, the potential for expansion is a salivating opportunity.
For Noble, the play is monstrous.
Most of the newly tapped wells will appear in shallow seas first, then move further and further offshore. This will benefit NE’s current shareholders and carry them through the pending spilt. And given that the offshore drilling rig market is already “tight” and will be that way for years to come, any growth in stemming from Mexico will cut rig supplies and help drillers raise day rates.