Seismic Opportunities (CGV, IO, OYOG, GGS)
Schlumberger's (NYSE: SLB) recent annual report had some sobering news on world-wide oil demand. Over the next two decades barrel-a-day consumption will rise from 90 million to 126 million. While these estimations can be expected given growing energy demand from emerging markets such as China and Brazil. The shock comes from the fact that the 36 million additional barrels “still to be developed– or even found.” Finding these additional needed barrels will be monumental task. This task will ultimately fall to a sub-sector of the oil services group.
The seismic contractors could be one of the major beneficiaries of the barrel-a-day shortfall and rising energy needs. These companies use a variety of seismic data and map potential hydrocarbon formations. With CAPEX spending by major oil E&P firms expected to rise 15% throughout 2011, the seismic firms should see a huge boost in new contracts.
CGV VERITAS (NYSE: CGV) is currently the big kid on the block, but smaller rivals have seen their share prices and revenues accelerate faster. Investors looking to play the space may want to look at ION Geophysical (NYSE: IO), Global Geophysical Services (NYSE: GGS) and OYO Geospace (NASDAQ: OYOG) as plays in the sector.
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