If you think oil stays above 70, then buy some Hess. This is the most growth
oriented big oil company out there, I think they replace their reserves at 250%
of production, probably even higher than that now with the slack in demand. I
don't like anything exposed to North American Natural Gas on the oil services
front. Every nat gas company out there is shuttering in production as they can
hardly make a profit with nat gas at this level. That does not bode well for
HAL, BJS or SLB. Deepwater drilling is OK, but again not stable unless their is
a big backlog of orders. If you want to play that go with RIG.

RIG and the other ocean drillers are staring at a capacity glut triggered by
last year’s $100-plus petroleum spike. CVX and OXY are solid and rate
“buy” recommendations from TheStreet.com Ratings. HAL is a “hold”
recommendation and suffers some of the same problems as RIG. Below is from a
report I recently wrote on RIG:
Transocean's(RIG ) cheap shares and dominance in offshore oil drilling make it
seem like a sure bet. But its investors might have to wait at least a year for
any significant gains.
The Switzerland-based company is the world's biggest offshore driller with 136
rigs, including 34 that can run in water deeper than 4,500 feet. With demand for
petroleum picking up and the price of crude oil edging higher, that seems like a
favorable position.
However, Transocean rigs might sit idle as oil and gas producers cut capital
spending this year. Overcapacity could stifle earnings at least though next year
and potentially through 2011, according to at least one analyst. That means
Transocean will collect less lease fees from customers that use its equipment,
making profits elusive.
Judson E. Bailey, a managing director at Jefferies and Co.(JEF), expects the
firm's net income to decline through 2011. He says the deepwater drilling
industry might be "modestly oversupplied by late 2010 to 2011, thus facilitating
a sharper and more prolonged dayrate and earnings downturn." He downgraded the
company to "hold" from "buy" in a recent report.
Go to the link below for the full report:
http://www.thestreet.com/story/10506138/1/is-it-safe-idle-rigs-could-hurt-transo
cean.html

Hercules Offshore - HERO -