Photo credit: Flickr/Nestor Galina.

Global energy production is booming. That's creating big opportunities for investors to profit from the boom. The only problem scenario is the fact that oil and gas are pretty volatile commodities. That makes it tough for some investors to stomach owning an exploration and production company.

One of the best ways to profit from the boom in production, but not succumb to the pitfalls of commodity prices, is to invest in the companies servicing and supplying the industry. In this case, the oil and gas equipment and services sector is a great place to look for investment ideas, with National Oilwell Varco (NOV -0.16%) and Weatherford International (NYSE: WFT) being two of its most compelling names. So, let's take a closer look at both companies to see which is a better buy.

Drilling down into National Oilwell Varco
Oilfield equipment maker National Oilwell Varco traces its roots all the way back to 1841. However, the company's most recent history dates back to the mid-1990s, when it decided to become the manufacturer for the oil and gas industry. Since no one else wanted the job, it basically had the market to itself and eventually consolidated its way to the top. National Oilwell Varco now operates in three business segments: Rig Technology, Petroleum Services & Supplies, and Distribution & Transmission, though it is in the process of spinning off its distribution business.

Today, National Oilwell Varco is really the worldwide leader in providing the major mechanical equipment for land and offshore drilling rigs. The company has more than 800 manufacturing, sales, and service centers enabling it to provide the energy industry with any equipment it needs. Because of this, many in the industry refer to the company as "No Other Vendor" because it's practically the only supplier -- 90% of all rigs carry at least some equipment made by National Oilwell Varco. On top of that, the stock is fairly inexpensive at about 15 times earnings and pays investors a recently boosted dividend that now yields 2.25%. Add to this the fact that it unlocked value by spinning off Now, and there's a lot to like in an investment in National Oilwell Varco.

Drilling down into Weatherford International
Meanwhile, Weatherford International operates more on the service side of the energy industry. Its core business segments include Well Construction, Formation Evaluation, Completion, and Production. Within these segments, the company performs a range of services including laboratory services, installing artificial lift systems, and designing a well for customers around the globe, as the following slide shows.

Source: Weatherford International Investor Presentation (link opens PDF).

The other big difference between the two is that Weatherford International is working to turn its business around after being investigated by the U.S. government because of its operations in Iraq as well as some accounting issues. However, with that in the past, the company is focusing on growing its core operations and improving its profitability. Some of its turnaround efforts include reducing its headcount and exiting non-core businesses in order to improve its margins and reduce its debt load. So far, the initial results are promising, but the company has a long road ahead of it. 

Investor takeaway
Here, investors really have two completely different choices. In National Oilwell Varco, we have the worldwide leader in oilfield equipment. Its stock is inexpensive, it recently completed a spinoff to unlock value, and the company pays a solid dividend. Weatherford International, on the other hand, is an oilfield service company that's trying to turn itself around after some trying times. Its profitability isn't as strong, nor does it pay a dividend. Because of that, I think National Oilwell Varco looks like a much better buy and is worth a closer look from investors thinking about adding some energy exposure to their portfolio, without being exposed to commodity prices. While there might be more upside at Weatherford, that upside comes with an added layer of risk.