Gulfmark Offshore is a $750 million dollar company which principally provides offshore marine services primarily to companies involved in offshore exploration and production of oil and natural gas. With the price of oil now above $60 per barrel, rigs are under substantial pressure to drill as much as they possible can in order to take advantage of increase in spot day-rates. The company has substantial control in the deep waters of the North Sea and South East Asia where margins have been increasing exponentially. Gulfmark has exceeded analyst estimates the past 4 out of 8 quarters by an average margin of 38.5%. Gulfmark’s EBITDA went from just $42 million dollars in 2004 to $216 million dollars in 2008, as net income went from just $400,000 to $150 million dollars in the same time period. Earnings per share (EPS) went from just $0.02 per share in 2004 to $6.13 per share in 2008.

Dril-Quip designs, manufactures, and sells a wide array of products used for offshore drilling , as well as production equipment for use in deepwater. The company’s principal products consist of subsea and surface wellheads, subsea and surface production trees, subsea control systems. Some of Dril-Quip’s clients include: Murphy Oil Corporation (MUR), BP (BP), Exxon Mobil (XOM), Conoco Phillips (COP), ATP Oil & Gas ATPG), and Petrobras (PBR). Revenues for Dril-Quip’s revenues went from $222 million dollars in 2004 to $543 million dollars in 2008, as the company’s backlog went from $127 million dollars to $603 million dollars in the same time frame. Net income went from just $12.5 million dollars in 2004 to $105.6 million dollars in 2008, as net income margin grew from just 5.6% in 2004 to 19.5% in 2008.

Operating as a mid-sized oil producer in both Texas and Colombia, shares of Houston American have had a 52-week trading range of $11.98 to $1.58, with the stock currently trading Monday afternoon right near its 52-week low of $1.73 per share. Unlike most mid-sized oil producers, Houston American has a superb balance sheet, with $10 million dollars, or 20% of the company’s market capitalization in cash, and zero debt on its books. Moreover, the company was profitable in 2008, which certainly says a lot given the company’s growth potentials ahead. Management also currently owns 55.45% of the company, which is a relatively higher percentage, suggesting an elevated conviction level on the company’s growth prospects going forward. Currently, the company is producing about 500 barrels of oil per day—but these number are expected to rise several hundred percent as additional wells are brought online throughout Texas and Colombia in 2009. Unlike Venezuela, Colombia is currently a net exporter of oil to the tune of approximately 325,000 barrels of oil per day, but the country’s reserves and productions rates have been declining. Thus, the country has enacted several lucrative offers for foreign oil companies, some of which will benefit shares of Houston American. Colombia is offering 100% company specific ownership of production projects, and substantially lower royalty rates and fees associated with production. All of this will equate to higher operating margins going forward. Houston American owns about 790,000 gross acres of land in Colombia, identifying more than 100 drilling locations currently. The CEO has publicly stated, that around $100 per barrel oil the company will have $13 in cash per share by 2011, extrapolating that statement further; the company should have no less than $4 to $5 per share in cash by 2011.

Oil States International has a large interest in the Canadian tar oil sands located in Alberta. Much of the world's oil (more than 2 trillion barrels) is in the form of tar sands, although it is not all recoverable. The stock is selling at 10X forward 12 month earnings per share with a 5 year consensus growth rate of 25%/annual, producing an attractive PE/Growth ratio. Oil States International offers various services on natural gas and oil well sites and is involved in the deep water offshore drilling products business as well. Despite being in all of the right market segments, Oil States is still dirt cheap.

Vaalco Energy (EGY): Vaalco Energy is a mid-sized oil producer located in the deep-waters of the African costs of Gabon, and Angola. The company also has states in various oil and natural gas projects in the United Kingdom and the Texas gulf coast. Vaalco’s Gabon asset is called the ‘Etame Field’ which first began oil production in September of 2002 and is currently producing 11,000 barrels of oil per day. In total, the Etame field and another Ebouri field have a total reserve potential in excess of 60 million barrels of oil. Vaalco’s Angola asset is called ‘Angola Block 5’ for the region it is located in. Here the company believes the total from this oil field is approximately 150 million barrels. Vaalco Energy also has $90 million dollars of cash sitting in the bank, and zero debt.