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What Does GE's Recent Purchase Say About the Oil Industry?

By Tyler Crowe and Aimee Duffy - Apr 14, 2013 at 8:15AM

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A purchase here and there is pretty normal for GE, but here's why this one really matters.

On the surface, General Electric's (GE -0.65%) announcement that it will buy Lufkin Industries (NASDAQ: LUFK) just appears to be a manufacturing giant picking up an oilfield services manufacturing specialist. If you dig deeper, though, you find that this could be a big signal of what is to come in North American oil and gas production. Lufkin's specialty is building artificial lift equipment for oil and gas wells, a service normally reserved for mature wells that need a little extra help bringing resources to the surface. 

With so much drilling happening in the U.S. over the past few years, there may be a big boom for this type of particular equipment in the next couple of years. With this purchase, not only is GE locking up a larger market share in this particular industry, but the high price it paid, it shows how valuable this market could be. in this video, contributor Tyler Crowe discusses how the deal went down, and he also gives some possible investment ideas that follow this particular trend.

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