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[Originally published on 6/11/2014]

The oil-spending spree is coming to the U.S.

Over the past year, I've highlighted the massive amount of money international oil companies (IOCs) are spending to find oil outside the U.S. I said oil-services stocks with international exposure, like Schlumberger (NYSE:SLB), Halliburton (NYSE:HAL), Baker Hughes, and Weatherford (NYSE:WFT), would be big beneficiaries of this trend.

These are the "nuts and bolts" plays of the oil industry. They provide drilling equipment and service crews to oil giants like ConocoPhillips (NYSE:COP) and ExxonMobil (NYSE:XOM).

Schlumberger, Halliburton, Baker Hughes, and Weatherford are up an average of around 85% since January 2013 – easily outperforming the market. And as I told you in April, these stocks still have room to run higher.

But now, many IOCs are expanding their search for oil into the U.S. And it means smaller oil-services companies are about to profit...

Regular Growth Stock Wire readers know IOCs are struggling to replace their oil reserves each year. There is plenty of oil in the ground yet to discover. But it's becoming much more expensive to find oil that's economical. As a result, oil companies are spending more and more each year to find oil. IOCs' oil and gas exploration spending has increased more than 12% annually since 2009.

For the past few years, these companies have been spending boatloads of cash to find oil outside the U.S. But now, many IOCs are starting to turn their attention to the U.S.

As I've mentioned in these pages before, we've seen a huge surge in oil production in America. New technologies – like fracking and horizontal drilling – have allowed oil companies to tap into incredible oil and gas reserves in shale areas like Texas' Permian Basin and Eagle Ford and North Dakota's Bakken. And as my colleague Matt Badiali recently wrote, there's plenty of economical oil in the shale left to be tapped.

That's why, according to Oil & Gas Journal, oil companies plan to spend $250 billion on oil and gas exploration in the U.S. this year. That's a huge 9.3% increase from last year.

The largest oil-services companies in the world will be beneficiaries of this trend. They help oil companies drill for oil and gas in every major shale area across the country, like the Permian Basin, Eagle Ford, and Bakken.

However, some of the biggest beneficiaries of this trend will be smaller oil-services companies, like Superior Energy Services (NYSE:SPN) and C&J Energy Services (NYSE:CJES).

These companies generate most of their sales from North America. And their earnings are expected to surge over the next few years as IOCs continue to spend billions of dollars to find new oil deposits in the U.S.

CJES also recently signed a deal to acquire the hydraulic-fracturing unit of Nabors Industries, which owns and operates the world's largest land-based drilling rig fleet. This will make CJES an even bigger pure play on the fracking boom in North America. And the company will now be incorporated in tax-free Bermuda. This will result in huge cost savings for CJES.

And because SPN and CJES have much smaller market caps than oil-services giants like Schlumberger and Halliburton, it would only take a small piece of the $250 billion pie to move their share prices sharply higher.

Plus, even though SPN and CJES are trading near their 52-week highs, they still trade at a discount to the average S&P 500 company... And CJES recently pulled back on news of the deal with Nabors Industries (NYSE:NBR) – making it a great time to buy.

As IOCs continue to spend billions to find oil to replace their reserves, oil-services companies will continue to move higher. I suggest buying smaller names like Superior Energy Services and C&J Energy Services today.

Disclosure: None

Source: The Next Beneficiaries Of The Oil-Spending Boom