Don't read too much into Ensco’s big new contract, analysts say

|About: Ensco PLC (ESV)|By:, SA News Editor

Ensco’s (ESV +0.3%) fleet status update released late yesterday said it had contracted one of its offshore drillers at a rate far above what anyone thought possible in the current weak market, but analysts still see a struggle ahead for offshore drillers and warn that recent share price strength won't continue.

Cowen analysts say the $650K dayrate for the Ensco DS-8 ultra-deepwater newbuild drillship is well ahead of the expected low-$500Ks thanks to unique circumstances, but lower-spec ultra-deepwater assets are commanding dayrates as low as $350K with the current market weakness likely to last well into 2015.

Still, the rally has pushed drillers' shares near their 200-day moving averages; today, DO +0.8%, SDRL +0.6%, HP +0.7%, ATW +0.1%, RDC -1%, HERO -2.2%.