Stellar performance from this oil services company isn't really a surprise after the recent uptick in exploration and drilling activities. Flotek Industries' (NYSE: FTK) outstanding third-quarter numbers now make it imperative to drill a little deeper and see where it's heading to. Let's do it together.  

Great turnaround
Higher demand, improved product prices, higher drilling activity and rising oil and mineral prices were some factors pushed up Flotek's revenue by a staggering 87.7% from the year-ago quarter to $75.1 million.

Such favorable conditions are giving most industry players something to cheer about. Schlumberger's (NYSE: SLB) third-quarter revenue was up a solid 49% from a year ago to $10.23 billion backed by higher exploration activity and price momentum. All three segments of National Oilwell Varco (NYSE: NOV) also benefited from increased drilling activity during its third quarter, taking the company's revenue up by 24% from last year to $3.74 billion.

Record third-quarter revenue nicely turned around Flotek's net losses by a huge margin -- from losses of $2.4 million last year to a profit of $17.9 million in its third quarter.

Drilling into promising areas
Flotek is set on expanding its product reach and operations. Regions like the Middle East and South America are catching up, and Flotek doesn't want to miss the boat. It recently got a $1.1 million order for petrovalves from a national oil company in Venezuela.

Flotek is not the only one eyeing these potential markets, though. Baker Hughes (NYSE: BHI) saw good revenue growth from Latin America in its third quarter. And it believes rig counts in the Middle East could go up, resulting in more business. National Oilwell, too, is moving up in these regions to tap the abundant shale opportunities.

An even smarter move is Flotek's hunt for opportunities in the up-and-coming Eagle Ford play and Permian basin. These areas, which are already adding to its market share and bringing more rental revenue into Flotek, could well give companies a breather from other low production fields. With oil companies trying to get a footing here, Flotek should be ready to grab higher-activity opportunities in the future.

The oilier, the better
Rising rig counts also added a spark to the present optimism. The total worldwide rig count rose 17.3% year-over-year as of Sept. 31, 2011. Baker's latest data also shows how U.S. oil rigs have jumped the most in three years. The international rig count for October was also up both sequentially and year-over-year.

An upward trend of rig counts indicates higher spending by oil and gas companies on development and exploration. Naturally, this also means greater demand for products that facilitate activities like drilling, which is where companies like Flotek step in with their offerings.

A gradual shift toward oil-directed and liquid-rich rigs should open up huge opportunities for Flotek. This is one reason why Flotek and its peers are so bullish about the North American market. Baker sees huge opportunities following the 35% jump in its third-quarter North American revenue. Schlumberger, too, feels drilling and production technologies in North America should enable it to weather any activity fluctuations.

The oilier the rigs, bigger the smiles on the faces of these companies!

The Foolish bottom line
Fracking might not taste good to environmentalists, but as far as investors are concerned, that line of business makes a good portfolio sweetener. An increase in rig count and drilling activity bodes well for Flotek.

I suggest monitoring Flotek's moves closely. To do this, simply add the stock to your Watchlist -- the free, personalized stock-tracking service brought to you by The Motley Fool. Also, don't forget to tell us on the Flotek Industries CAPS page what you think about the stock.