2 Less Volatile Oil Plays

Focus: ENERGY

Elliott Gue Image Elliott Gue Editor and Publisher, Energy and Income Advisor and Capitalist Times

Demand should remain high for these two companies' offerings whether or not oil prices rise or fall on a given day, says Elliott Gue.

You may have considered oil as an energy investment, but where are other growth opportunities here in that industry?  My guest today is Elliott Gue to talk about that.  So Elliott, people have their ideas of whether or not oil’s going up or down. What are the other opportunities in energy right now?

One of my favorite sectors in global energy markets is the oil services industry.  This would include a lot of companies that are involved in various activities related to drilling wells or producing from wells, or going in and doing maintenance on wells. 

The largest in the world is a company called Schlumberger (SLB).  It’s a company I do like a lot, and one of the things that we’re seeing right now is in international markets that business is really tightening up.  With oil—the Brent crude oil price is well up over $100 a barrel.  US WTI or West Texas Intermediate prices are much lower, but internationally oil prices are very high. 

That means that companies are allocating a lot more money to expending on exploration and development of fields they’ve already found. So, they’re spending a lot of this money, and a lot of this money is flowing to the services firms. 

In Schlumberger’s case, they’ll manage projects, big international oil and gas projects.  What they’re seeing is that there’s not enough service capacity to meet all of the demand that’s out there.