On May 10, 2016, we issued an updated research report on leading supplier of offshore contract drilling services to the oil and gas industry, Ensco plc ESV.Having transformed from a Gulf of Mexico (GoM) company to a relatively pure international play, Ensco is well positioned to improve its earnings and revenues in the foreseeable future as well as benefit from a recovery in oil-directed drilling. However, the near-term market conditions appear bleak and a large number of rigs are expected to go idle in 2016. Nevertheless, Ensco's efforts should eventually be accretive to its earnings.Ensco has a contracted revenue backlog (excluding bonus opportunities) of $5.2 billion, which provides it with excellent cash flow visibility. The completion of the construction phase of its eight additional rigs in 2015, along with the recently ordered two 140 series jackups, has well positioned Ensco for significant growth.Ensco’s impressive balance sheet and sufficient liquidity should help it address any operational or corporate need. At the end of the first quarter, Ensco had $1,084 million in cash and cash equivalents. Long-term debt (including current maturities) was $4,991 million, with debt-to-capitalization ratio of 33%. Therefore, we believe that Ensco remains well positioned to comfortably compete in the future amid a manageable debt position.However, as crude gets deeply entrenched into a bearish territory, the top energy companies have resorted to spending cuts (particularly on the costly upstream projects) due to lower profit margins. This, in turn, means less work for drilling contractors like Ensco.Moreover, the company is expected to have increased downtime in 2016. This will affect its utilization rates in the coming quarters and thus, lower revenues. Further, the challenges associated with contracting rigs for extensions in Brazil are a concern.The increased supply of high-spec rigs is likely to put pressure on the utilization of standard jackups in the long run. Again, the company's execution ability with respect to the jackups under construction will play a major role in determining its growth prospects.Stocks to ConsiderCurrently, Ensco carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the oil and gas sector include CVR Refining, LP CVRR, Transocean Partners LLC RIGP and Braskem S.A. BAK. All these stocks sport a Zacks Rank #1 (Strong Buy).Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report TRANSOCEAN PTN (RIGP): Free Stock Analysis Report BRASKEM SA (BAK): Free Stock Analysis Report ENSCO PLC (ESV): Free Stock Analysis Report CVR REFINING LP (CVRR): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research