For the last two years, shares of Lufkin Industries (Nasdaq: LUFK) simply drifted sideways. However, following its first-quarter earnings announcement, investors hoisted the oil-and-infrastructure company's share price up more than 10% on Wednesday. The company's $1.01 earnings per share (before items) beat the high end of its own guidance by a penny, and the manufacturer also raised its full-year estimates by $0.10 per share, to $5.10 to $5.30.

You have to drill a bit into Lufkin's numbers to find the source of the company's enthusiasm. After all, quarterly sales slipped slightly from a year ago, and earnings fell 12% to $15.6 million.

Two-thirds of Lufkin's business comes from its oil field division, which posted slightly lower quarterly revenue year over year. Lufkin is exiting its unprofitable trailer business after 65 years, and year-over-year comparisons still include that division. As such, the company saw about $7 million less in revenue from that business. But the power-transmission division offset that decline with a similar dollar gain in revenues, representing nearly 20% growth in that business.

Lufkin has seen a strong pickup in order demand that should propel its remaining divisions to even stronger gains for the rest of 2008. High energy prices are feeding demand for its oil pumps, and Lufkin saw a 26.3% sequential increase in order backlog from the fourth quarter of 2007, to $97.1 million. Similarly, the power-transmission business is seeing strong demand for its products from the energy sector; its backlog grew 12.6% sequentially.

The company will need to grow production to meet this demand, but its clean balance sheet and strong financial position shouldn't be an obstacle. Lufkin carries no long-term debt, and it holds nearly $7 per share in cash. Management needs to make good on its expectations, and a drop in energy prices could certainly curb demand, but on the whole, Lufkin appears to be drilling in the right spot.

While it operates in specific niches and is dwarfed by the biggies, Lufkin's pickup in demand may foretell a similar fortune for others yet to report. Keep an eye on BJ Services (NYSE: BJS) to possibly see some turnaround, and watch for Weatherford (NYSE: WFT) to continue its fourth-quarter momentum.

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Fool contributor Steven Renaldi does not own shares of any companies mentioned. The Fool has a disclosure policy.