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My colleague Travis Hoium recently had a look at contract driller Noble's (NYSE: NE) third quarter, as well as its post-moratorium outlook. Let's now turn to competitor Ensco (NYSE: ESV), whose own results and comments should add to our understanding of the state of the global drilling market.

As Travis noted, Ensco's results were not hit nearly as hard on a year-over-year basis as those of Noble. A major difference here is that Ensco added a new deepwater rig to its fleet, as well as a high-end jackup purchased from Diamond Offshore (NYSE: DO) earlier this year. Deepwater segment operating income more than doubled, owing largely to that additional rig. This largely offset the decline in the jackup segment, which was hit by lower dayrates, particularly in the Americas.

Importantly, the ENSCO 8500 and 8501, the two deepwater semisubmersibles working for clients in the Gulf, continued to operate during the moratorium, albeit at a mutually agreed reduced rate for a short period of time. Deepwater utilization was only hit by a rig moving off location in Australia and a dispute with Nexen (NYSE: NXY) that we'll get to in a moment. Overall deepwater utilization came in at 75%, versus 64% in the prior year. Ensco's jackup utilization also improved, to 79% from 64%.

As for the Nexen dust-up, this concerns the ENSCO 8502, which was set to begin its contract in the Gulf of Mexico in August. Nexen took the position that it wasn't obligated to accept the rig, given the moratorium in place, and refused to accept the rig. This continues today, even with the moratorium lifted. I think Ensco will manage to negotiate some sort of settlement for the equivalent of "back rent" owed, but it's not guaranteed. At more than $480,000 per day, the delay is costing Ensco a pretty penny, and the company could miss out on a big chunk of revenue if this dispute doesn't break in its favor.

Looking ahead, Ensco didn't have too much insight to offer with regards to the Gulf of Mexico deepwater permitting situation. When asked about this on the conference call, management directed analysts to operators, as they're the ones on the front lines. That means we need to pay close attention to forthcoming conference calls by the likes of Anadarko Petroleum (NYSE: APC), Apache (NYSE: APA), and Cobalt International Energy (NYSE: CIE) over the next few weeks. The latter will be particularly worth tuning in to, as Cobalt is scheduled to put the freshly built ENSCO 8503 to work early in 2011.

As for Ensco, the company is relatively well protected from a near-term sag in activity, given the pristine balance sheet. With the share price steadily rising over the past few months, I'd say that investors are looking past the current difficulties to brighter years ahead. They're right to do so.

Disclosure: No position in any company mentioned.

Source: Ensco Muscles Through Moratorium