as part of our
In the field of oil exploration and production, most people
readily recognize the names of the big players: Exxon, BP and
companies of that ilk. But what a lot of people don't realize is
that oil services companies are the ones who lug the
around, do the actual drilling and keep everything humming
The two big players in the oil services industry are of course
) and Schlumberger (
). They are colossal in every way. They have huge contracts, and
provide cost savings because they are so enormous. Still,
Halliburton did not meet Wall Street's expectations when the
company released its third quarter earnings statement.
Part of the problem is that the number of oil rigs has been
slowly but surely declining over the past three years. So things
are a little tough for Halliburton right now, and even tougher for
some of the smaller oil services companies. But it won't stay that
way, because even if drilling sanctions aren't loosened up after
the upcoming presidential election, the U.S. still remains in the
cat-bird seat when it comes to natural gas. In other words, someone
is going to have to lug the petroleum hoses.
One company to keep in mind is Baker Hughes Inc. They provide
the full gamut of oil services, but are poised perfectly in the
areas of hydraulic fracturing and pressure pumping. Producing
prolific oil shale wells requires high-pressure hoses and powerful
pumps. With natural gas and shale oil prices sitting where they
are, the big exploration and production behemoths will have plenty
of cash on hand, which will make it easy for them to do more
drilling in 2013. Since Baker Hughes does a lot of business with
the majors, they should be positioned well.
Industry analysts predict that exploration and production
budgets will rise as much as twenty percent in 2013, concentrating
specifically on shale fields located in the U.S. and Canada. The
forecast growth in shale wells bodes well for any oil service
company that can overhaul wells. In addition, Baker Hughes Inc.
have people, experts, who excel at restoring production levels from
And last but not least, Baker Hughes' drilling fluids division
appears poised for profitability. This division handles all aspects
of problematic projects, including deepwater drilling, oblique
drilling and horizontal drilling. Everything from bentonite and
specialty fluids delivered under high pressure via hose to pumps
and ancillary equipment.
Within the current economic and political environment, along
with the outlook for the oil and gas industries generally speaking,
oil service stocks might be a good play.