Oil Tops $103; Oilfield Services Stand to Gain (HERO, TOLWF, SLB)

Oilfield service companies like Hercules Offshore, Inc. (NASDAQ:HERO), TRICAN WELL SVC CO LTD (PINK:TOLWF), and Schlumberger Limited. (NYSE:SLB) all stand to gain in my opinion as oil producers scramble to open up new fields to offset the Iranian cutoff of Britain and France due to geo-politics.

Oil topped $103 on Friday on the news that tough Euro sanctions against Iran had forced the country to retaliate with cutting off cheap oil supplies from its wells.

I think all the developed economies in the world will expand exploration, open up old wells, and make deals to make delivery more efficient. I also think that emerging and especially ‘third world’ countries will rush in to buy up the cheap Iranian oil now sitting in excess.

Getting a new finds is easier these days than it used to be…     

Global oil titan Schlumberger, trading in the $77.74 range, has a Reservoir Production Group segment that provides oilfield services from storage to data monitoring to well completion equipment to slickline services for downhole mechanical well intervention.

This month SLB said its new PressureXpress-HT reservoir pressure service and MDT Forte-HT qualified, rugged, high-temperature formation sampling and pressure system was now available for clients to deliver reliable downhole fluid analysis, fluid sampling, pressure measurement and interval pressure transient testing. This speeds up the process of getting oil out of the ground.

Trading in the $5.32 range, and on Friday removing its ‘poison pill’ provision from its shareholders rights agreement, Hercules Offshore is also well positioned to pick up business that require oilfield services experience. 

About the amendment…

"This step was taken by the board of directors with an eye to evolving principles of corporate governance and shareholder relations, and not with reference to any proposed or expected acquisition transaction," said John Rynd, president and CEO of Houston-based HERO.

On Feb 9 for the Q4 ended Dec 31 (Q4), Hercules Offshore beat expectations on revenues and exceeded expectations on EPS. HERO recorded revenue of $162.8 million and I’m thinking that number will increase as oil producers pick up speed in balancing out the Iranian cutoff.

And even though geo-political alignments provide some countries with a little more security; having oil is not a given.

Russia for example, after a very aggressive bidding process awarded oilfield service provider Trican Well with contracts that TOLWF management is estimating its 2012 revenue to increase approximately 10%, as measured in rubles, relative to 2011. 

The expected increase in average revenue per job is the combined result of increased pricing partially offset by the impact of smaller fracturing job sizes and a shift in the sales mix toward the cementing, coiled tubing and nitrogen service lines. These service lines typically experience a lower average revenue per job relative to the fracturing service line.

Trican Well provides various specialized products, equipment, services, and technology for use in the drilling, completion, stimulation, and reworking of oil and gas wells primarily in Canada, the United States, Russia, Kazakhstan, and northern Africa.

TOLWF was trading up on Friday in the $16.22 range. 

I haven’t, don’t, and do not intend on holding any of the companies mentioned in this article.