“The world’s oil exploration and production is migrating offshore into deep water,” notes Byron King. “There are a lot fewer onshore opportunities now than there used to be. It’s fair to say that the biggest onshore oil and gas prospects are either already drilled (hey, North America has been drilled like a pin cushion), or locked up for political and environmental reasons.

“Thus, exploration has moved offshore. The shallow coastal areas have been good bets over the past few decades, yielding immense volumes of oil and natural gas. In the U.S., oil companies have been drilling in the shallow waters of the Gulf of Mexico since the 1940s. They even drilled offshore Southern California in the 1960s. But those shallow offshore prospects are pretty much drilled by now, or they’re off-limits due to environmental restrictions. So the industry is moving further offshore into deep water, defined as more than 1,000 feet.

“Today, deep water is a key focus of the international majors. The energy industry has new geological models and better geophysical technology and data. There have been vast improvements in signal processing and data crunching. And we are living through a time of absolutely revolutionary advances in drilling capability. What used to be just trackless, wave-tossed ocean is now prime oil patch real estate. It follows that today we are seeing phenomenal success rates for exploration, with super-high output wells.

“I strongly believe that a lot more deep-water holes are going to get drilled. There’s almost no doubt about it. The world’s deep-water rig fleet is destined to grow dramatically in the next few years, despite the worldwide recession. From 213 rigs afloat in 2008, the construction and commissioning schedule forecast is for well over 300 rigs available by 2012. Most of these new vessels and platforms are fifth generation, designed for deep water and harsh conditions. The drawings are complete, the keels are laid, the steel is being welded. These new ships will cut water.”