NEW YORK (TheStreet) -- Shares of Ensco (ESV)  are down 1.62% to $22.48 in afternoon trading today as Brent crude declines.

Brent fell 1.68% to $59.17 at 3:48 p.m. in New York, while West Texas Intermediate was up 0.91% to $50.06 as an industry report showed that U.S. crude stockpiles in a key storage hub rose less than expected last week, the Wall Street Journal reports.

Oversupply, however, seems to be the predominate preoccupation that continues to weigh on the industry.

"Very high inventory levels are perhaps the main micro reason to remain cautious on oil prices," analysts at Bank of America Merrill Lynch said in a report projecting a global inventory build of 180 million barrels by the third quarter of 2015, the Journal noted.

The bank sees the U.S. benchmark ending the second quarter at $41 a barrel, while Brent is expected to fall to $48 a barrel over the same period.

The London-based offshore driller is looking to cut costs and recently opted to cut its dividend, amid falling oil prices and an expected downturn in demand for its rigs.

Insight from TheStreet's Research Team:

Casey Hoerth, a contributor for TheStreet's RealMoney.com recently penned 'Ensco's Dividend Cut Is Preemptive,' in which he gives more details on the company's cost cutting efforts and makes the case for an attractive entry point.

Here's a snippet of what he had to say:

I wrote an article last September on Ensco (ESV) a major offshore rig lessor. In the article I wrote that Ensco was a solid choice for dividends. I specifically liked that Ensco had relatively-low leverage and a high-dividend coverage ratio.

Unfortunately, Ensco just cut its dividend by 80%, from 75 cents per quarter to just 15 cents per quarter. Management was a lot more conservative and proactive than I expected. Although Ensco probably could have maintained its dividend, CEO Carl Trowell said that he saw the downturn in demand for rigs as a 'multi-year' event, making it best to cut sooner than later.

Looking at the most recent day rate and bidding data, it's hard to disagree with Trowell's assessment. Ensco decided to control what it could control, and part of that strategy included drastically reducing the dividend.

Besides cutting the dividend well before it absolutely needed to, Ensco is also taking a few proactive steps to cut costs. First, management laid off 15% of its land-based workforce. This quarter Ensco also decided to cold-stack three jackups and one more drillship, Ensco 8502, which just rolled off contract. Management may decide to cold-stack one more drillship next quarter.

Put this into perspective: Ensco 8502 is a semisubmersible drillship. Existing deepwater jobs are catching bids from multiple companies. Management could not find another job for Ensco 8502 -- despite the ship being only five years old.

Ensco has six more drillships rolling off contracts in 2015, Ensco, and each of these will have to compete with more than 40 sixth generation newbuilds coming out of the shipyards. Chances are there will be more cold-stacking over the course of this year.

Ensco is also hi-grading its existing fleet so that it can remain competitive. Ensco currently has seven newbuilds under construction. Four of those are jackups. The other three are drillships, two of which have contracts. Apart from that, Ensco is doing some major upgrades, including adding mooring capabilities to Ensco 8500.

A look at Ensco's fleet report shows that five drillships are coming off contract in 2015 and another six are coming off contract in 2016. Remember, management said that it believed this downturn would be a 'multi-year' event. There could be a lot more cold-stacking in Ensco's future. This is a big reason why Ensco decided not to give revenue guidance for the full year. Not giving revenue guidance is a clear sign that management expects more rig-stacking, but that it cannot anticipate how much.

Of the large-scale offshore rig lessors, Ensco is the only one I feel comfortable owning at this point. Shares are down a whopping 38.75% since just last October. Ensco trades at 4.3x trailing 12-month earnings. The trailing enterprise value to earnings before interest, taxes, depreciation and amortization ratio is also only 4.3x.

With the way day rates are going right now, it might take a couple years for things to substantially recover, but I think Ensco is a good 'recovery' name in this sector. If history is any guide, these stocks turn back up well before fundamentals do. Therefore, I believe Ensco can be purchased right here.

-Casey Hoerth, 'Ensco's Dividend Cut Is Preemptive' originally published 3/4/2015 on RealMoney.com.

Want more information like this from Casey Hoerth BEFORE your stock moves? Learn more about RealMoney.com now.

Separately, TheStreet Ratings team rates ENSCO PLC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate ENSCO PLC (ESV) a SELL. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share." You can view the full analysis from the report here: ESV Ratings Report