Ahead of the Bell: Goldman upgrades oil services

A Goldman Sachs analyst upgraded the oilfield services sector to "Attractive" from "Neutral" Thursday, predicting strong profit growth due to greater drilling activity and high oil prices.

Analyst Charles Minervino expects earnings to grow in the double digits through 2011 as high oil prices lead to more rapid rig construction, and both drilling activity and the rates oil companies pay for drilling will increase.

Minervino raised price targets throughout the sector, and said deep water drillers Transocean Inc., Diamond Offshore Drilling Inc. and Pride International Inc. will be paid higher rates. He also favors land services that do a significant amount of business in North America, including Halliburton Co., Nabors Industries Ltd. and Helmerich & Payne Inc.

He added that Schlumberger Ltd. will also benefit from higher spending and increased rig counts.

Oil prices ticked down Thursday morning, but reports indicated that a militant group attacked an oil installation in Nigeria.

In premarket electronic trading, Transocean shares added $2.01 to $152.16. Halliburton stock picked up 62 cents to $51, while Schlumberger rose $1.38 to $106.30.