Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

3 Stocks Riding the Hard-to-Reach-Oil Boom: Oceaneering International (OIL), Occidental Petroleum Corporation (OXY)

Page 1 of 2

With more and more new sources of oil and gas found tucked away under the ocean or in land rock formations, the companies that specialize in getting out those hard-to-reach deposits will prosper. Three in particular should benefit: Oceaneering International (NYSE:OII)Cameron International Corporation (NYSE:CAM) and Occidental Petroleum Corporation (NYSE:OXY).

In the near term, their success hinges on future prices of oil and gas. A slide in energy prices will make the high cost of drilling offshore or into shale formations less appealing and profitable. Since the easy recoverable oil is already found, it is more difficult to discover and extract the new sources.

Oceaneering International (OII)The good news: Though struggling, the world economy continues to expand, putting the need for oil and gas on a firm footing for decades to come.

Most experts see rising prices as Asia continues its relentless growth and Europe, currently a basket case of economic dysfunction, regains its balance. While in the Americas, the U.S. continues to slowly struggle its way to health, and South America, dominated by the growth and size of Brazil, strikes a similar pattern of economic recovery.

World oil and gas production is changing. The Middle East will continue to be very important, but a shift is taking place. The U.S. is relentlessly marching toward less reliance on foreign supplies of oil and is destined to be a net exporter of natural gas.

To achieve this goal, energy companies are exploiting their large shale formations where oil and gas is trapped inside rocks. With new techniques, these reserves are now economical to exploit, due to high oil prices. Additionally, Brazil’s discovery a few years ago of massive deepwater deposits are going to take a decade or more, and over $50 billion to develop.

Let’s look at the three companies with good odds of doing well getting deep-buried energy out:

Oceaneering International (NYSE:OII)

Oceaneering International is a $6.7 billion (market capitalization) provider of equipment that allows exploration companies to work far underwater. The company is a leader in remotely operated vehicles, which perform tasks at dangerous depths, and it furnishes thousands of miles of subsea umbilicals – hardy cables for power lines and digital signals. As oil companies such as Petrobras in Brazil exploit their offshore reserves, OII is well-poised for future growth.

Oceaneering is growing at a rapid clip of 25% or more in sales and revenue. Their operating margins remain steady at 23% to 24%, while sales dramatically climbed in recent years. Net margins mark a similar path of consistency at 10%. They consistently grow earnings per share year after year with estimates in 2012 of $2.64 and 2013 of $3.21.

These numbers come at a cost, translated into an elevated price/earnings ratio. With a recent stock price of $62, the P/E is 23 and, based on earnings estimates for 2013, its forward-looking multiple is 19. The dividend yield is not huge, but at 1.1% it has room to grow. At this point, the growth rate justifies higher ratios as long as nothing interrupts the upward trend in profits.

Cameron International Corporation (NYSE:CAM)

Cameron is one of the largest providers of equipment and services for onshore wells, but with a growing share of the offshore market, too. It has the dubious honor of making the Deepwater Horizon blowout preventer – a valve that is supposed to prevent perilous surges of oil and gas from a well – whose failure led to the 2010 oil spill. Transocean installed the ill-fated Cameron device on BP’s doomed Gulf of Mexico oil platform.

As a result of that disaster, Cameron puts paramount emphasis on safety. The company’s inspection business of the equipment they sell is rising fast.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!