National-Oilwell Varco: Way to Play $140 Oil

The financials are in free fall, construction is stagnant, the airlines are trying not to crash and the automakers are hitting the skids – there is no denying the overall market really sucks right now. But, enough with the doomsday predictions and cough cough, the possibility that the US Government could lose its AAA credit rating! Let’s focus on what is working – deepwater drilling.

Oil at over $140 per barrel has opened up a lot of oil sources that, at lower oil prices, would not have been economically feasible. A lot of these reserves are deep underwater – like Petroleo Brasileiro's (PBR) Tupi field find. In order to get at these vast undersea reserves oil companies are going to need highly specialized rig equipment. That is why PBR recently contracted out 85% of the world’s offshore rigs, an event that drove up rig day rates.