Oil Energy Thread (oih)

[madrose1]

SLB SII ...The appeal of oil services stocks-Barron's Online

From the "Weekday Trader" section: As the parts department for the energy exploration business, the oil and gas services industry has kept the fossil-fuel engine running in high gear. Shares of oil and gas service and equipment companies themselves are up about 60% in the past 12 months. In recent weeks, though, services companies lost value during profit-taking in commodity-tied stocks. Yet the positive long-term outlook for the services industry remains strong: rising global demand for oil and natural gas weighed against the need to replace dwindling supplies.

That's why there's still appeal for some large services companies, which provide everything from seismic reserve-measuring systems, like international industry giant Schlumberger (SLB), to fluids used to flush oil from deep wells, such as Smith International (SII). Analysts expect Schlumberger, the largest energy-services company as measured by market capitalization, to boost revenue by 17% and earnings by 30% in 2007. Meanwhile, demand growth for Smith International's drilling fluids, high-end drill bits and equipment that completes wells should yield 18%-22% revenue growth over the next five years, says one analyst.

In either case, for investors who still have the energy for energy, buying into oil and gas services may serve as a fresh spark plug for portfolios in the coming year - as long as oil demand doesn't completely collapse.