ENSCO (ESV): A 'winner' in deepwater driller

"Large oil discoveries in deep-water off the coast of Brazil has triggered another major long-term round of contracts for the leading international drillers," says Eric Roseman.

The editor of Commodity Trend Alert explains, "This bull market is accelerating and we must grab it by the horns now." Here, the resource expert looks at ENSCO International (NYSE: ESV).

"The Brazilian find sits thousands of feet below the surface and only the major drillers can get to that oil. Other fields in Russia, the North Sea and off the coast of Indonesia require the drillers.

"The order backlog has become enormous and following the Brazilian offshore find, will create an even deeper backlog. It's time to boost our allocation to the oil equipment and services companies.".

"The leading drillers, in my opinion, are still undervalued relative to their earnings prospects. And one great company that still trades less than its projected earnings and cash-flow over the next 12 months is Dallas-based ENSCO, a premier global offshore drilling contractor.

"Its services are essential to oil companies in their worldwide exploration and development efforts. Its fleet of 52 rigs (including six ultra-deepwater semi-submersible rigs under construction) is strategically located in the most prolific domestic and international oil and gas markets.

"In early 2001, ESV completed construction of its first deepwater semi-submersible rig, which has proven to be a cost-effective solution to deepwater drilling. T

"he company has embarked on construction of six additional ultra-deepwater semis. The first is scheduled to be delivered in the third quarter of 2008 with the others following in 2009, 2010, 2011 and 2012. 

"ENSCO's balance-sheet is rock-solid. The company has $665 million dollars in cash against a total of $291 million in long-term debt. Any time you can find a profitable business where cash and cash equivalents are more than the company's entire long-term debt, you've got a winner."