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North American Unconventional Plays: as Drilling Becomes More Difficult, Equipment and Services Must Become More Powerful

67 WALL STREET, New York - March 6, 2013 - The Wall Street Transcript has just published its Oil & Gas: Drilling Equipment and Services Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Capital Expenditures and Consolidation Activity - Frontier Exploration and Development - Shale Drilling Capital Expenditures - Oil Price Expectations - Shale Drilling Dynamics - Shale, Offshore and Deepwater Drilling - Oil and Gas Price Divergence - Offshore Deepwater Oil Discoveries

Companies include: Baker Hughes Inc. (BHI), Halliburton Company (HAL), Schlumberger Limited (SLB), Weatherford International Ltd. (WFT), Atwood Oceanics Inc. (ATW), Diamond Offshore Drilling Inc. (DO), Ensco International Inc. (ESV), Hercules Offshore, Inc. (HERO), Noble Corp. (NE), Rowan Companies Inc. (RDC), Transocean Ltd. (RIG), Helmerich & Payne Inc. (HP), Nabors Industries Ltd. (NBR), Patterson-UTI Energy Inc. (PTEN), Cameron International Corporat (CAM), Lufkin Industries Inc. (LUFK), National Oilwell Varco, Incorp (NOV), Oceaneering International, Inc (OII), Chesapeake Energy Corporation (CHK) and many more.

In the following excerpt from the Oil & Gas: Drilling Equipment and Services Report, an expert analyst discusses the outlook for the sector for investors:

TWST: You're pretty comfortable with North America over the short to medium term?

Mr. Browne: North America is actually a very exciting story, one that the average investor may not be aware of. During the financial crisis, we started to see the development of unconventional fields and shale drilling. Chesapeake (CHK) was the most prolific independent E&P company targeting gas. If you look at the unconventional rig count since the financial crisis in 2008-2009, it has doubled since then.

Originally, E&P companies started out looking for natural gas, and were so successful that natural gas prices decreased from north of U.S.$12/Mcf to as low as below $3 in 2012. As gas prices came down, E&P companies shifted their attention toward using that same suite of technology and technique to developing unconventional oil reserves. As a result, a large proportion of capital and resources are being targeted toward unconventional drilling in prolific plays such as the Eagle Ford and Bakken.

To illustrate, around the time of the financial crisis in late 2008, only 20% of rigs were targeting oil. Today that proportion has grown to over 75% drilling for oil. One of the names I really like that's levered to the whole shift towards unconventional drilling is Helmerich & Payne. They have been a very prolific provider of drilling rigs, and while drilling rigs have been around for well over 100 years, in the past 10 years or so they came out with an unconventional-optimized offering, their FlexRigs. Patterson and Nabors followed suit and came out with their APEX Rigs and Pace Rigs respectively, which have some of the same features.

The point is...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.