UPDATE 1-RESEARCH ALERT-Dahlman upgrades offshore drillers

June 2 (Reuters) - Dahlman Rose said it was upgrading its outlook for the offshore drilling stocks based on its expectation for increased spending by oil and gas exploration and production companies.

"Crude oil prices have gained significant momentum over the past several weeks, and we believe exploration and production companies could continue to become more aggressive in their spending plans," analyst Omar Nokta wrote in a research note to clients.

"Offshore drilling demand has been under pressure this year, particularly for non-deepwater assets; however we are seeing signs of a reversal later this year," he added.

The analyst also noted that several smaller E&Ps have announced increased capex spending plans in recent weeks, and believes that this is a strong signal that others will follow. Nokta reiterated his "buy" rating on Diamond Offshore Drilling Inc (DO.N) and Noble Corp (NE.N).

He upgraded Transocean Ltd (RIG.N), Ensco International Inc (ESV.N), and Atwood Oceanics Inc (ATW.N) to "buy" from "hold".

The analyst also upgraded Rowan Companies Inc (RDC.N) to "hold" from "sell".

The Dow Jones U.S. Oil Equipment & Services Index .DJUSOI was down 0.04 percent at 452.37. (Reporting by Hezron Selvi in Bangalore; Editing by Jarshad Kakkrakandy)