Escalation of violence in Libya was again the cause of the oil price spike, as the International Energy Agency upped its estimate of the production shutdown in Libyan oil to 1 million barrels per day. The previous IEA estimate had been a range of 850,000 barrels to 1 million barrels per day. Libya produces roughly 1.6 to 17 million barrels of oil per day.

Even the weak natural gas market has provided a few recent signs of unexpected drilling potential, though, with the big deals between Encana ( ECA) and PetroChina ( PTR), and Chesapeake Energy ( CHK) and BHP Billiton ( BHP) suggesting that natural gas drilling activity may even receive an incremental activity boost, the analyst noted.

"Driller reports across the board have been better than expected and margins have not declined with day rig pricing increases and costs in check. Analysts have been able to raise numbers a bit further and there's a general expansion for the land drilling group, especially given that they were among the worst performers last year," the analyst said.

-- Written by Eric Rosenbaum from New York.

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