Wednesday, January 18, 2012

Investing in Energy Services Stocks

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Why the entire sector should see a rising tide of revenue and profits... for the next few years.

The rapid increase in horizontal drilling and the shale revolution, the energy sector is re-defining the need and demand for North American energy services companies.

This has created a work backlog that has the entire industry - drillers, fracking companies, fluid specialists, water services - stretched to the limit, which will keep revenue and profits rising for the sector for at least three years, say research analysts.

Peters & Co., a Calgary based oil and gas boutique brokerage firm, estimates 2011 cash flow per share will increase 40% over 2010 for their coverage universe in the energy services sector - 40%.

Securities firm Raymond James says oil and gas companies will increase spending 25% this year alone to US$133 billion.

Even more, they estimate spending will have to increase by about 56% above 2011 levels, to roughly US$206 billion, as more powerful rigs are needed to drill deeper - and longer -- horizontal wells. Oil & gas companies spend that money; energy services companies receive that money.

It means the energy services sector will be one of the safest and most lucrative investment opportunities during that time. A rising tide of revenue and profits will lift all stocks, and create M&A activity that will also enrich investors.

With oil back up over $100/barrel, oil producers are drilling as fast as they?

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Source: http://oilprice.com/Energy/Energy-General/Investing-in-Energy-Services-Stocks.html

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