The Middle East is a powder keg. No matter who is right or who is wrong in this mess between Israel and Lebanon, it is a mess that could get a lot worse. I hope it is settled peacefully, but since I have no control over it, and with oil approaching $80 a barrel, there is no sense in not making some money. With oil and gas becoming harder to find, drilling companies are sitting in the driver's seat. Global Santa Fe ( GSF) and Ensco International ( ESV) are two that are going to benefit. In the first quarter, Global Santa Fe produced an operating profit of $180.8 million, a 237% increase from the year-earlier quarter. Earnings per share grew to 65 cents from 21 cents. In addition, Global Santa Fe announced a share-buyback program of $2 billion, which would reduce the shares outstanding by 10% to 15%. Global Santa Fe accomplished these numbers by increasing the day rates of its rigs to $101,000 in the first quarter from $68,400 in the first quarter of 2005. The company also claimed projections would be for an increase of 40% this year for day rates. Global Santa Fe didn't have to wait long. A month after the quarterly report, the company announced that four of its functioning 59 rigs had received four-year contracts with Saudi-based Aramco to leave the Gulf of Mexico for day rates in the mid-$160,000 range. Global Santa Fe said this contract was a record for it, and perhaps a record for the drilling industry. The company also announced that its drilling backlog had reached $8 billion, from $7 billion in the prior year and $4.8 billion from the start of 2006. There were a total of 148 rigs in the Gulf of Mexico in 2001, compared to 98 today; last year's hurricanes exacerbated the problem. This has increased Global Santa Fe's utilization rate from 91% to 94%. Despite 91 offshore rigs currently being built, compared to 10 in 2003, there just aren't enough rigs to go around. The result is that the contractors have tremendous pricing power, which they are using wisely.