By S.R. Nunnally

Today, I'd like to focus on a company whose fleet of 520 vessels provides services to the offshore energy industry.

That company is Tidewater, Inc. (TDW:NYSE).

Next year, TDW could make a run at its all-time highs set back in November 1997 of $67.70. TDW is currently trading at about $51. For the quarter ending September 30, TDW saw earnings grow more than 26% and revenue grow more than 34% year over year.

But let's get into what Tidewater does, and see why it would benefit from opening the Outer Continental Shelf.

TDW isn't a driller or explorer, but if you want to get your drilling rigs, equipment, and personnel to your drill site, you call Tidewater. TDW's vessels offer a range of services, from platform tugs to crew tugs. Its anchor tugs are capable of positioning drilling rigs in “any location, at virtually any depth and under any conditions.” Its offshore tugs fleet is the largest in the industry.

Analysts are estimating that TDW will pull in an annualized 36% earnings growth over the next 3-5 years. It's not an overestimate with deals like these:

Recently, TDW completed the sale of 10 offshore tugs to Crosby Marine Transportation, LLC for $31.5 million. Four more offshore tugs will be sold for another $13.3 million during the remaining days of 2006.

TDW has offices around the world, and will surely be well positioned to take advantage of growing offshore energy demands. It has locations in the Middle East, Australia, Northern Europe, Africa, the Gulf of Mexico, and South America. This geographic diversity allows TDW to provide services to every world energy market while hedging against geographically specific disasters, like hurricanes in the Gulf of Mexico, or unrest in the Middle East.

At first glance, TDW might seem an expensive stock to own. But when you look at the potential growth in its industry, and the forecasted earnings growth, it's clear that TDW is undervalued.

Here are my estimates: In the short-term, TDW will test its 52-week high of $62.88 (from early May 2006). That should come in the next 3-4 months. Longer-term, I estimate it will test its all-time high of $67.70 (from November 1997). That should come in the next 6-8 months.

Of course, all this could change once OSC drilling legislation hits the president's desk… And it will.