Barclays downgraded offshore oil drillers Ensco (ESV) and Atwood Oceanics (ATW) to Underweight, the firm's equivalent of a sell rating, from Equal Weight. Large oil companies probably won't undertake more drilling projects until at least early 2018, the firm believes.

WHAT'S NEW: Barclays analyst J. David Anderson now does not expect the offshore oil drilling market to recover until early 2018, versus his previous estimate of early 2017. Even if oil prices increase to $50 per barrel by the end of the year, large oil companies will concentrate on improving their balance sheet and will avoid undertaking new offshore projects for several quarters, the analyst believes.

The analyst also noted that the CEO of drilling services provider Transocean (RIG) recently said that day rates may not increase again until 2019 or 2020. Only 25% of rigs will be re-contracted over the next 18 months, estimated Anderson. He predicted that Ensco's stock would tumble 33% from current levels, and he estimated that Atwood's shares would sink 30%.

PRICE ACTION: In late morning trading, Ensco rose 0.5% to $10.65 and Atwood slipped 1% to $8.34.