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So Exxon Mobil (NYSE:XOM) recently announced its new budget for the next 5 years. Well, not surprisingly, this 400 billion dollar company announced big plans and lots of new spending over the coming years, but its projections for future demand were interesting too.

Exxon to me has been the best run of the majors for some time, though the stock price has languished because of the company's large market cap and capital intensive business that prevents significant cash returns to shareholders. Still, when Exxon talks you should listen. The company recently announced plans to invest 185 billion dollars over the next five years, projected about 1%-2% annual demand growth, and about 30% demand growth by 2040.

What is interesting about Exxon's large expenditure plans is that they aren't in the natural gas space. While oil prices have stabilized at high levels, natural gas prices continue to languish at around the two dollar level. With oil demand rising as most major companies' production numbers continue to flatline or decline, it is interesting too see both how much big oil is planning to spend, and where it will be spending it over the next couple years.

By far the single space where most of the largest oil finds have been over the last several years has been in the deepwater space. While Petrobras (NYSE:PBR) announced the biggest recent discovery off the coast of Brazil, large finds in the Gulf, off the coast of Argentina, and in West Africa have also been at significant depth below the ocean.

Chevron (NYSE:CVX), BP, Royal Dutch Shell (NYSE:RDS.A), and other big oil companies have also announced big plans for the gulf that are mostly focused on new and existing deepwater projecects. Most large drilling companies like Transocean (NYSE:RIG) are also seeing their deepwater rig utilization rates continue rise over longer periods of time even as demand for mid-level and jackup rigs has flatlined or declined.

Rig Type

Utilization / Avg. Daily Revenue, Sept. 30, 2010

Utilization / Avg. Daily Revenue, Dec. 31, 2010

Utilization / Avg. Daily Revenue, March 31, 2011

Utilization / Avg. Daily Revenue, June 30, 2011

Ultra-deepwater

77% / $422,800

76% / $435,900

77% / $467,700

80% / $516,600

Harsh environment

93% / $414,100

92% / $366,800

83% / $402,400

93% / $430,100

Midwater

73% / $328,400

68% / $298,500

60% / $313,000

54% / $333,000

High-specification jackups

61% / $138,100

38% / $162,600

40% / $106,200

56% / $110,300

Standard jackups

52% / $113,200

46% / $110,600

43% / $109,200

43% / $111,700

Total fleet

64% / $271,200

58% / $276,600

55% / $292,600

55% / $312,100

Source: Company 10-K and 10-Q filings for the 3-month periods ending on given dates.

Indeed, given the high rates that deepwater drilling rigs command, their is little incentive to drill deeper unless these companies feel this is where their best returns are likely to be. The drilling rates at the deepest depths have also held up better because many of the new rigs coming to market have been jack-ups and mid-water rigs, and deepwater drilling is tied almost exclusively to oil rather than natural gas prices.

To conclude, while deepwater drilling hasn't enjoyed the best PR over the last couple years, the moratorium in the Gulf and difficulty in obtaining new permits has resulted in an excess supply of rigs on the market in the short-term. However, long-term, big oil continues to focus on new and bigger deepwater projects in the Gulf and elsewhere.

While the Gulf has been closed for significant new drilling projects the couple years, with demand rising, prices high, production numbers waning, and countries like Saudi Arabia and Iran holding most of the largest current oil reserves, drilling there is beginning to seem more appealing. With many drilling companies underperforming both the energy sector (NYSEARCA:OIH) and the S&P 500 (NYSEARCA:SPY) as a whole for some time, this is a nice sector for investors to seek both growth and dividends over the long-term.

Source: Big Oil's Big Budget: A Guideline On Where The Best Value Is In Oil Services