National-Oilwell Varco (NOV)

Remember what they say about the `49 California gold rush? The people that really got rich were the ones making the shovels. If you want to invest in the oil exploration boom, you should take that history lesson to heart. Individual oil exploration companies will succeed or fail based on whether they strike black gold. But National-Oilwell sells them all the drill bits they need to get digging.

National Oilwell Varco will benefit from improving conditions in the global oil market, especially due to its investment in its deepwater drilling equipment business. Deepwater drilling is one of the only drilling markets that continues to see growth despite the decline in commodity prices. Since equipment used on deepwater drilling rigs is more complex and expensive than that used on land or on shallow-water rigs, NOV generates high profit margins in its deepwater drilling equipment business. One potential ongoing catalyst for National Oilwell is a series of deepwater oil projects spearheaded by Petrobras in Brazil. Estimates suggest Petrobras will need at least 28 new ultra-deepwater rigs to develop all of the fields it has discovered. More deepwater and ultra-deepwater drilling activity translates into higher revenues for National Oilwell Varco.

Remember what they say about the `49 California gold rush? The people that really got rich were the ones making the shovels. If you want to invest in the oil exploration boom, you should take that history lesson to heart. Individual oil exploration companies will succeed or fail based on whether they strike black gold. But National-Oilwell sells them all the drill bits they need to get digging.