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What: Shares of Ocean Rig UDW Inc. fell 12% today as falling oil prices crushed everything within reach of the energy sector.
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So what: As a deepwater drilling rig supplier, Ocean Rig is dependent on strong oil and gas markets for demand for its assets. Falling energy prices doesn't bode well for demand in the long term, even if that hasn't shown up on the income statement, where Ocean Rig has reported $1.60 in earnings in the past year.
Now what: Ocean Rig wasn't the only driller to take a beating today, as the entire industry is selling off. This is a byproduct of lower oil prices, and at the moment there doesn't seem to be any stopping the selling. Eventually, oil will bottom, and when it does, the industry's top drillers will be a bargain, but I'd look at higher quality names such as Seadrill, Ensco, and Transocean for a safer way to play the industry than Ocean Rig if you think the oil market is at its bottom.
The article Why Shares of Ocean Rig UDW Inc. Plunged Today originally appeared on Fool.com.
Travis Hoium owns shares of Ensco and Seadrill. The Motley Fool recommends Seadrill and owns shares of Seadrill and Transocean. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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