Profiting from Oil Exploration and Production through Investing - dummies

Profiting from Oil Exploration and Production through Investing

The exploration and discovery of oil is a lucrative segment in the oil business. You can invest in companies that specialize in the exploration and production of oilfields, known in the business as E&P. Oil wells are found in one of two places: on land or on sea.

Among industry insiders, exploring for oil and gas is affectionately called wildcatting. Most wildcatting expeditions end up without any oil discoveries. When wildcatters drill a hole in the ground and no oil comes out, that is known as having a dry hole, the unfortunate opposite of a gusher.

Offshore drilling

Offshore drilling generates a lot of interest among investors, and a flurry of activity has been taking place in this sector as oil on land becomes more and more scarce.

Here are some of the leading offshore drilling companies are

  • Transocean Inc. (NYSE: RIG): Transocean, with more than 90 offshore drilling units at its disposal, is an expert in operating under harsh and extreme weather conditions. It has offshore operations in the U.S. Gulf of Mexico, Brazil, South Africa, the Mediterranean Sea, the North Sea, Australia, and Southeast Asia.

  • GlobalSantaFe Corp. (NYSE: GSF): GSF is a global offshore drilling contractor, operating a fleet of more than 60 vessels in locations stretching from Canada to the Middle East. It operates in three major segments: the leasing of drilling equipment, services, and crews (contract drilling); engineering and project services where it teams up with clients to provide offshore engineering solutions; and turnkey services where it assumes full control and responsibility of drilling projects from the design to the implementation phase.

  • Noble Corp. (NYSE: NE): Noble is one of the oldest drilling contractors in the world. With a fleet of more than 60 vessels and operations stretching from Brazil to the North Sea, it has an edge in implementing technologically oriented solutions to meet customer demands.

If you’d like to dig deeper into this sector, check out the Rigzone Web site, which includes up-to-date information on the offshore industry, as well as the oil industry as a whole.

Onshore drilling

While most industry insiders agree that a majority of onshore oil wells have been discovered, you can still benefit by investing in companies that are involved in the exploitation and production of onshore oilfields.

Here are a couple of companies to consider:

  • Nabors Industries (NYSE: NBR): One of the largest land drilling contractors in the world, Nabors has a division that can perform heavy-duty and horizontal drilling activities.

  • Patterson-UTI Energy Inc. (NASDAQ: PTEN): Patterson-UTI, an onshore oilfield drilling contractor that has extensive operations in North America, operates in a number of segments, including the drilling of new wells and the servicing and maintenance of existing oil wells.