Barron's and the oil service stocks

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Includes: ATW, PDE, THE
by: Michael McAllister

A couple of mentions of the oil service sector appear in this week's Barron's (paid subscription required).  Alan Abelson's Up & Down Wall Street column discusses (with a friend with a pseudonym) the pros and cons of the drillers in particular.  Key points below:

Spencer Jakab's Wave of the Future deals with other oil service stocks, focusing on what one might consider to be the majors of the sector.   The thesis echos, Harry from above, the cycle will be stronger and longer than in the past.   It will also be more global. Stocks mentioned below:

From Abelson's column

  • Harry (that's name Alan uses for his friend) has been an energy bull for awhile.
  • Lack of reserves should make this cycle longer and more fruitful than ones in the the past.
  • Six months to three years time horizon
  • Favorite:  offshore driller Transocean (ticker: RIG), believes that P/E will fall to 14x in 2006
  • Alan wants to see a better entry point
  • Other offshore drillers are Atwood (ticker: ATW), Diamond Offshore (ticker: DO),  ENSCO (ticker: ESV), GlobalSantaFe (ticker: GSF), Noble (ticker: NE), Pride International (ticker: PDE), Rowan (ticker: RDC), and TODCO (ticker: THE)

    Companies mentioned in Jakab's article:  Again RIG, Shlumberger (ticker: SLB), Baker Hughes (ticker: BHI), BJ Services (ticker: BJS), Halliburton (ticker: HAL), Smith International (ticker SII).  Outside of RIG the other companies are diversified in their services and all have an international exposure.