When I moved to SW Louisiana 10+ years ago, the oil field was down. Property values were down. Unemployment was high. Many of those here who lived through the 80's oil bust were really hurt, and some are only now recovering. I don't work in the oil industry, but live in the oil patch. The thing that got me interested in investing in oil drilling and services was the gradual transformation which has taken place locally around Lafayette and New Iberia. It is one thing to study financial data and operating performance from afar, but another to actually see all the expansion of existing businesses, new facilities, and other visible signs. Every day I drive by SLB, HAL, RON, SII, FLC, DO, WAI ,WII, UFAB, VRC, and countless other smaller company facilities. To say this place is hopping is an understatement. The traffic on 4 lane Hwy 90 between Lafayette and Morgan City has increased to the point where it is equivalent to many heavily traveled interstate highways. Baker Oil Tools just broke ground in an ex-sugar cane field for a new facility, which rumor says will employ 750 people. It looks like a huge site. The local growth has developed in a controlled manner.
You know you are in the oil patch when a fax addressed to RIG comes to you accidentally from a drill pipe vendor. When this happened to me to day, I just wrote a note and forwarded the fax, thinking that as a RIG stockholder it was prudent to do so.
I need to remind myself of the above observations occasionally as the portfolio fluctuates in value. Now I am off to the salt mine (a real one) where at 3 AM I will serve steaks to my graveyard crew of miners for working 1.5 million manhours without a lost time accident.
One other note: local service companies like GLBL and UFAB who survived and expanded in spite of the oil bust are particularly well managed, and should do extremely well over the next 5 to 10 years, which is the minimum time period the local oil patch people expect the uptrend in activity to continue.
Good luck, Chas |
