Earlier today, we reported on the remarkably stable results of offshore driller Noble (NYSE: NE), which was buoyed by ample deepwater exposure. Turning to Ensco (NYSE: ESV), we see the weakness of the jackup market taking its toll on even the tightest-run ships.

For the third quarter, revenue dropped more than 30% compared with last year, while per-share earnings were nearly halved. Results were also lower compared with the second quarter, as jackup rig utilization trends deteriorated in Europe, Africa, and the Americas. Utilization held steady in the Asia Pacific region, but this area reported the lowest rate last quarter. Overall, jackup utilization dropped to 61%, compared with 72% last quarter and 97% a year ago.

Ensco's deepwater segment was also affected this quarter, though for different reasons. As reported in early September, the company experienced unplanned repair downtime on both the ENSCO 7500, working for Chevron (NYSE: CVX) in Australia, and the newer ENSCO 8500, contracted to Eni (NYSE: E) and Anadarko Petroleum (NYSE: APC) in the Gulf of Mexico. On its conference call today, the company reported that it has "resolved OEM equipment issues causing the down time." These service outages chipped $0.19 off of Ensco's earnings number.

This wasn't a great quarter for the driller, but there are several reasons for investors to take heart.

One, jackup markets look to be firming. Ensco has put some previously stacked rigs back on payroll and expects utilization to increase in most markets. This mirrors comments by Noble management, who cited "a good chance" that utilization and day rates in most international markets "will hold at current levels with potential for upside" as long as oil prices behave.

Two, Ensco's revenue balance is shifting in favor of the deepwater segment. The brand new ENSCO 8501 just began a 3 ½-year contract with Nexen (NYSE: NXY) and Noble Energy (NYSE: NBL) in the Gulf of Mexico. The company sees deepwater revenue for 2010 more than doubling to nearly $600 million.

Finally, Ensco's balance sheet is a beauty, and the company should have no problem funding the back half of its big semisubmersible fleet expansionout of cash flow (plus an undrawn $350 million credit facility, if necessary).

I fail to see any serious storm clouds on the horizon for this drilling stalwart. I'm clearly not alone, because Ensco is rated a full five stars by Motley Fool CAPSparticipants. Share your views on the contract driller with your fellow Fools right here.

This article was originally published as This Driller's Down, but Not Outon Fool.com

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