Recently, U.S. government official Michael Bromwich gave the oil drilling industry a dose of good news when he said that the moratorium on deepwater drilling in the Gulf of Mexico will likely not be extended past November 30, 2010. Even more promising was the news that it may be cut short if the industry cooperates with new regulations. The overall implication is that on a worse case basis, the moratorium will probably expire in just over two months times.

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Shares Drilling Up
No surprise, then, that shares in the oil drillers are being pushed up by Mr. Market. Always the anticipatory creature, Mr. Market is looking ahead and seeing better days ahead for drillers. Of course the big unknown - the future price of oil - will always play a role in the profitability of oil drillers.

But as a consequence of the oil spill in the Gulf of Mexico involving BP (NYSE:BP) and Transocean (NYSE:RIG), the largest oil drilling contractor in the industry, shares in deepwater oil drillers were also drilled downward. That has led to great long-term value opportunities in the industry, especially in the case of Noble (NYSE:NE)

Nimble Noble
Noble is the second largest deepwater driller behind Transocean. Even more attractive, over 80% of the company's 62 drilling rigs operate in international waters. So while a small portion of its fleet suffers from the drilling moratorium in the Gulf, the shares have been hit just as hard as drillers with greater Gulf exposure.

In addition, it sports one of best balance sheets in the business with no net debt. Only Ensco (NYSE:ESV) has a better balance sheet. And while all the major drillers trade at P/Es of 10 or less, Noble and Ensco also trade close to book value. Diamond Offshore (NYSE:DO) a quality driller in its own right, fetches more than two times book value.

Drill Baby, Drill
Relative to its future growth potential, Noble shares look incredibly attractive trading at eight times earnings and under six times forward earnings if earnings expectations are met. As long as the price of oil cooperates, Noble shares should reward investors going forward. (For related reading, take a look at A Primer On Offshore Drilling.)

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