ConocoPhillips (COP), Apache Corporation (APA): Oil Production in the Gulf of Mexico Is About to Explode

Looking at the contract drillers, the Gulf currently represents about 31% of Noble Corporation (NYSE:NE)’s business; however, it is positioning itself to capture even more of the ultra-deepwater marketplace as it transforms its fleet. In 2011, just 24% of its revenue came from ultra-deepwater projects, but by 2015 the company estimates ultra-deepwater will be 40% of its total revenue. This will help the company double its earnings.

Seadrill Ltd (NYSE:SDRL) is also spending vast sums of capital to build out its ultra-deepwater fleet. Just last week the company announced it had ordered another four ultra-deepwater drillships. These vessels, which will cost about $600 million apiece and won’t be ready until 2015, are capable of handling the harsh conditions of the Gulf. Seadrill expects these ships to eventually add to its contracted backlog, which will enable the company to keep its large dividend both flowing and growing.

The final play to keep an eye on is Enterprise Products Partners. The company has a terrific set of assets already in place, which it’s leveraging to take advantage of production growth in the Gulf. One example of this is that it’s repurposing part of an underutilized natural gas pipeline in order to take advantage of the growth of oil production. This type of project provides low-risk returns for investors, while also providing critical infrastructure to the Gulf’s growing oil production.

Final Foolish thoughts
It’s amazing what can happen in just three years. What was once thought of as an area in decline, the Gulf is now poised to double production by the end of the decade. Investors who get in on the ground floor should do very, very well.

The article Oil Production in the Gulf of Mexico Is About to Explode originally appeared on Fool.com.

Fool contributor Matt DiLallo owns shares of Enterprise Products Partners L.P. and ConocoPhillips. The Motley Fool recommends Enterprise Products Partners L.P. and Seadrill. The Motley Fool owns shares of Apache and Seadrill.

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