The U.S. government just approved the first deepwater oil drilling permit since last summer’s disaster in the Gulf of Mexico.
The Bureau of Ocean Energy Management approved Shell’s plan, and now the company will launch 3 wells 130 miles off the coast of Louisiana.
If you’re investor this should be exciting for one clear reason, according to Citi.
It is worth noting that oil prices have climbed by approximately $30 per barrel in the 10 months since the Macondo blowout. The Gulf of Mexico was a highly attractive basin for oil and gas exploration at the $70 oil price level and it has not lost its appeal as oil prices have climbed to the $100 per barrel level.
And who’s going to benefit the most from this reopening? Citi has a buy rating on Transocean (RIG), Diamond Offshore (DO), and Noble Corp (NE), but they name Transocean their best bet.
Among these three companies, RIG has the most deepwater rigs (14) in the Gulf and stands to benefit most from a gradual resumption of deepwater drilling. We rate these stocks Buy-High Risk (1H) and RIG is our top pick among the three companies.