Seadrill Ltd (SDRL), Oiltanking Partners LP (OILT): Three Stocks for the Offshore Boom

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The world is gearing up to spend more and more money pillaging deepwater oil and gas reserves. Norway’s parliament has opened up a new part of the Arctic Circle to oil and gas drilling, the European Union recently passed legislation to tighten up offshore safety measures, and the U.S. House of Representatives just passed a bill to increase offshore oil and gas drilling here in the States. The exploration and production industry is already pouring billions of dollars into offshore areas, and the results are coming in the form of discovery after discovery of natural gas deposits and ambitious deepwater drilling endeavors.

Transocean LTD (NYSE:RIG) is as good a bellwether as any, given it’s the world’s largest offshore driller. The company’s most recent fleet status report shows that a number of rigs that were idle are now booked for work. Seadrill Ltd (NYSE:SDRL) is no slouch either, with its fleet of 61 drillships and rigs. It just inked a massive $2.7 billion contract with Brazil’s state-owned oil company, Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR).

A semi-submersible offshore rig. Photo: © Seadrill Ltd (NYSE:SDRL)

As the offshore movement intensifies, Transocean LTD (NYSE:RIG) and Seadrill Ltd (NYSE:SDRL) should benefit, but there will be many winners, including the three companies I’m talking about today.

1. KNOT Offshore Partners LP (NYSE:KNOP)

Ever wonder how the oil gets from the offshore rig to the onshore refinery? Sometimes there’s a pipeline, and sometimes there are shuttle tankers, like the ones owned and operated by KNOT Offshore Partners LP (NYSE:KNOP).

The master limited partnership only went public April 10, but don’t let that fool you. Parent company Knutsen NYK has origins that stretch back 120 years, and it’s the second-largest shuttle tanker company in the world. KNOT Offshore Partners LP (NYSE:KNOP) only has four vessels in its fleet right now, but it has at least five tankers identified as potential drop-downs from the parent company.

2. Oiltanking Partners LP (NYSE:OILT)

Oiltanking Partners LP

The Houston ship channel is the Mecca of marine transportation services for the oil industry, and Oiltanking Partners LP (NYSE:OILT) has one of the largest third-party terminals there. It’s got six deepwater docks and a storage capacity of 12.1 million barrels.

The partnership handles a variety of products, including crude oil, fuel oil, refined products, liquefied petroleum gas (propane), and chemical feedstocks. All those different products mean that Oiltanking Partners LP (NYSE:OILT) also has a host of different customers, which results in diversified income, something every investor loves to see.

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