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Schlumberger Ltd.: Peak oil isn't bad for everyone
1/3/07
1/2/07
Thursday, January 4, 2007
While some energy companies are worried about dwindling reserves,
Schlumberger Ltd (NYSE: SLB) stands to gain enormously as oil and gas
become harder to find.
This company provides high-tech equipment and services to oil and gas companies, and its products are especially useful for the kind of unconventional drilling needed to find new sources. SLB is one of the top two companies in the world for just about every type of product and service it offers, and it invests heavily in R&D to maintain its competitive edge.
Not surprisingly, results have been very impressive over the past couple years. Growth in revenues and profits has been steady and impressive, and there's no reason to think this growth won't continue for the next few years. SLB's global focus gives it good protection against a downturn in any one region. Russia holds particular promise: The company has been working there for 50 years and now stands to benefit greatly from that country's rapidly growing oil business.
There are some risks -- oil is a cyclical business, and a company like SLB has high capital and R&D costs. The stock price has risen quickly and some analysts feel it is way overvalued. The longterm may be difficult as the world's economies try to conserve or adapt new forms of energy. But for the foreseeable future, oil and gas are only going to be in higher demand as China, India and other developing countries continue to grow and as the United States continues to rely on hydrocarbons.
Type of stock: A large-cap oil and gas services company, one of the leaders in all it does.
Price target: I believe that SLB (now at $60) will hit $80 in early 2007---as long as the price of oil continues its ascent. (Note: Hilary is the owner and/or beneficial owner of shares of SLB)
hilaryonstocks at 2:38:00 PM EST Blog about this entry |
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Schlumberger Ltd.: Peak oil isn't bad for everyone
This company provides high-tech equipment and services to oil and gas companies, and its products are especially useful for the kind of unconventional drilling needed to find new sources. SLB is one of the top two companies in the world for just about every type of product and service it offers, and it invests heavily in R&D to maintain its competitive edge.
Not surprisingly, results have been very impressive over the past couple years. Growth in revenues and profits has been steady and impressive, and there's no reason to think this growth won't continue for the next few years. SLB's global focus gives it good protection against a downturn in any one region. Russia holds particular promise: The company has been working there for 50 years and now stands to benefit greatly from that country's rapidly growing oil business.
There are some risks -- oil is a cyclical business, and a company like SLB has high capital and R&D costs. The stock price has risen quickly and some analysts feel it is way overvalued. The longterm may be difficult as the world's economies try to conserve or adapt new forms of energy. But for the foreseeable future, oil and gas are only going to be in higher demand as China, India and other developing countries continue to grow and as the United States continues to rely on hydrocarbons.
Type of stock: A large-cap oil and gas services company, one of the leaders in all it does.
Price target: I believe that SLB (now at $60) will hit $80 in early 2007---as long as the price of oil continues its ascent. (Note: Hilary is the owner and/or beneficial owner of shares of SLB)
hilaryonstocks at 2:38:00 PM EST Blog about this entry |
Add to del.icio.us | digg this
This entry has 5 comments: (Add your own)
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Rowan Companies is also possible takeover candidate because of the big cashflow in the oil sector which are used to fund mergers and aquisitions. Besides this ofcourse a solid company, with a low P/E ratio as said before, but an extra thing for those interrested in speculating on the market.
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Think your right about the stock pick of Schlumberger, but I think it might be to early to buy. The recent decrease of oil might go on for a (short)while. Next technical support is $48 dollar a barrel, and $40 dollar is also a possibility, but when the oil price stabilizes and starts going up, a new oil rally might be there again. At the moment one of the most important factors for oil (geopolitics) is stable so only other factors move the market, but when new conflicts arise in Nigeria or the Middle East the oil related stocks will go up again. Besides this some say that the recently quite big sell off of oil might also be institutions like hedge funds changing their possitions, so oil dropped with a ''shock'' in just a few days time. Im waiting to see what happens. Another good pick (for when oil goes up again) might also be Rowan Companies (RDC) also an oil services company. Now at $30,40 down from $48 in April 2006 , a low PE value of 8. Just had its best year in history.
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This is response to comment by rshuman53.You have a choice to respond and to make comment, you don't have to be mean.With freedom of expression comes also responsibility.Use it wisely.
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how about if the price of oil continues its descent? will is stilll be a good one?
you can get by on your looks; i just wondered.
1/7/07 12:20 PM