Can Money Still Be Made in the U.S. by Energy Service Companies?

Domestic oil and gas service companies have taken a hit in the recent past due to a slowdown in the natural gas drilling boom of the last couple of years. As this market looks to rebound, investors would be wise to consider Halliburton, one of the top companies in the business, and one of those most in tune with the domestic market. To access The Motley Fool's new premium research report on this industry stalwart, simply click here now and learn everything you need to know about how Halliburton is positioning itself both at home and abroad.

Joel: Going back to a lot of the services, you mentioned a lot of the international plays that are going on. Even in North America, it seems like these companies... Recently Baker Hughes was hurt because of a lack of North American revenue.

What you're hearing is, North America is becoming energy independent. You've got EOG growing their oil production by 122,000 barrels since 2010, Kodiak Oil having 150%-200% oil growth; is there a future in North America? How are the service companies not making money there? Or is there a company that you like in this space, by itself?

Taylor: I think what a lot of these companies saw recently is the dry-up of natural gas production. The companies really drilled so many wells that they kind of pulled back on actually producing from these wells, so there's a huge backlog of wells that have been drilled, they've got the infrastructure down in the ground, and they just haven't been fracked yet.

I think a lot of these service companies are just waiting for that to happen. Halliburton is primed to take advantage of that, because they're one of the fracking leaders, if not the fracking leader, as far as knowledge of the industry is concerned and relationships.

I definitely think that once the pressure pumping business gets back under way, which a lot of these companies have seen their margins – you mentioned Baker Hughes – they just released that they're expecting lower fourth quarter revenues and earnings because both the rig count is lowered and margins have shrunk a little bit.

I think once this pressure pumping gets back under way, which it undoubtedly will once natural gas prices creep back up, I think you're really going to see Baker Hughes and Halliburton capitalize on that more than a Schlumberger, who focuses more internationally.


Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2182789, ~/Articles/ArticleHandler.aspx, 12/20/2014 6:18:13 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement