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A Small-Cap Oil & Gas Play

By Jason Moser 

GulfMark Offshore [NYSE: GLF] provides offshore marine services throughout the world to companies involved in the exploration and production of oil and natural gas. This $1 billion company owns vessels that transport materials, supplies, and personnel, and position drilling structures.

Why now's the time to buy

GulfMark's fleet is one of the youngest in the industry.And although dayrates (the fees drilling contractors receive from oil and gas companies for their services) have increased, utilization rates have gone down slightly because of lower activity. Add in the uncertainty still lingering after the Deepwater Horizon oil spill, and it's no surprise that the market hasn't paid much attention to the stock until very recently.  

However, recent drilling success in areas like East Africa, along with increasing activity in other areas like the Black Sea and Falklands give the company reason for optimism.

The industry as a whole is primed for an uptick

In fact, the industry anticipates spending close to half a trillion dollars on exploration and production in the coming year. And with companies like ExxonMobil and Chevron leading the way, it's hard to believe this is just a hunch.  

This marks a huge shift from the cautious spending of the past few years. What's more, with experts forecasting that the current price of oil is sustainable and set to increase, deepwater drilling should become more profitable.

Shareholders and managers unite

CEO Bruce Streeter is a busy man, serving as both the company's COO and President. But I'm not concerned.

You see, insiders own nearly 10% of GulfMark's outstanding shares. Even better, the company ties compensation to operating income. Together, these two facts ease my concerns about Streeter's multiple roles.

What's more, stock ownership guidelines require management to own a percentage of shares in the company, meaning they have a strong incentive to make good decisions.

Risks to be aware of

Global oil and s