Where the big money is headed in oil stocks
By Andrew Mickey
As expected, oil continues its climb through the summer. Although it still hasn’t hit its peak of $78 a barrel from last August, the right oil stocks are surging.
Just take a look at Schlumberger (SLB:NYSE). Yesterday, the oil service giant posted record profits thanks in large part to growth in its seismic data-surveying business segment, WesternGeco. But this entire sector is doing well.
In the past two years Norway-based Petroleum Geo-Services revenues has climbed 85% and demand for Dawson Geophysical’s services has soared 143%. Even WesternGeco, the seismic services division of Schlumberger, has climbed 99% to more than $2.4 billion.
And there’s no sign of this trend slowing down. WesternGeco has a backlog of more than $1.1 billion and “sees no slackening in activity until 2010.”
But here’s the kicker, they all buy seismic data-acquisition equipment from one small Texas-based company. You see, this company is on the cutting edge of the seismic data equipment and is making big waves with its 4-D seismic technology.
In the past all we had was 3-D seismic technology. 3-D did a good job. According to the American Petroleum Institute, “3-D seismic profiling offers a wide range of valuable benefits, both on land and offshore. The success rates for locating higher quality targets are improved by as much as 50 percent or more. Fewer wells need to be drilled and production recovery per well is increased by as much as 100 percent.”
Those results are with the old 3-D technology. The new 4-D is much better!
Clearly, the oil industry is about to fall in love with 4-D seismic technology. From the booming sales growth of seismic data services companies, we can see demand for this company’s 4-D technology is running strong. The cat’s not out of the bag yet about the impact this technology will have on the oil industry.
No wonder Lehman Brothers initiated coverage on this company with an “overweight” rating. While Big Oil’s profits are tied to oil prices, this company’s profits are tied to continued demand for oil worldwide regardless of price. Learn all about 4-D technology and how it could push oil prices down to $30 a barrel by the end of the decade here.
That’s all for now,
Andrew Mickey
Editor in Chief, BreakAway Investor
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