The Latest Oil Boom, 36,552 Feet Below the Gulf of Mexico

Baker Hughes and Schlumberger, two of the world’s largest oilfield services companies, beat analysts’ third quarter expectations on the strength of their international businesses, but highlighted a new boom in U.S. drilling offshore in the deep waters of the Gulf of Mexico.

While the U.S. has been producing an increasing stream of oil, onshore shale drilling has not been a bright spot for the companies in recent quarters. That’s because energy exploration companies have been getting more efficient, drilling fewer wells that produce more crude.

But both Baker HughesBHI +0.56% and Schlumberger now say the hydraulic fracturing equipment overhang that had been dogging them is finally getting worked off. Customers are even more interested in taking higher-priced, high tech solutions, such as fracking techniques that reduce water use while boosting oil output.

But it’s really drilling offshore in the waters off the Gulf Coast that is driving Schlumberger’s positive outlook for North America. The company said its U.S. offshore business set a new high for quarterly revenue. Baker Hughes touted its own new offshore record: in the third quarter it drilled the deepest well in the Gulf’s history, boring down to 36,552 feet.

Shareholders are rewarding both companies for their results. Baker Hughes shares shot up 7.8% to $55.85 this morning. Schlumberger shares are up 2.4% to a recent $93.65.