NEW YORK, NY, (NAMC) - As the level of uncertainty rises in the global markets there is one thing that will remain a constant and that is oil consumption. Although alot of politics do surround the global oil industry not one group can deny that the level of oil consumption on a global scale, especially with China chiming in with their ever increasing consumption, will grow steadily.
The United States is trying to implement various alternative energy programs from ethanol to solar and at some point in time this will have a strong impact but right now its impact is that of a pop gun as opposed to a cannon. Now with that in said, lets get to the heart of the matter and that is offshore oil drilling.
With the Middle East trying to put a strangle hold on the direction that oil prices will go more offshore oil drilling companies may be looking to ramp up their efforts, and in doing so they will need offshore drilling equipment.
One of the companies that we see benefitting from this is a provider of contract drilling and drilling-related services, the name of the company is Parker Drilling Company (NYSE: PKD) and they are involved in United States barge drilling; international land drilling and offshore barge drilling, they are also a company that rents out drilling-related tools.
Now Parker has a fleet of rigs that they are ready to roll when not in use, the company has over eight (8) land rigs in the Commonwealth of Independent States, about nine (9) land rigs in the Asia Pacific region, which will come in very handy as China looks to increase their oil supply, they have three (3) land rigs in the Latin America region and three (3) land rigs in the United States. Now these figures may have changed on the upside but the point is that Parker is strategically placed to take advantage of the need for their equipment and services.
Let me just give a run down of the most recent events that are surrounding Parker, earlier this month the company announced a 32% rise in 2nd quarter profits and on the 18th of August Parker announced that the Tax Committee of the Ministry of Finance of the Republic of Kazakhstan directed the Atyrau Tax Committee to stay enforcement of the notice of income tax assessment against the Kazakhstan branch of a Parker subsidiary.
With that news one would think that investors and institutions would be bullish on the stock but since July of 2007 the stock has dropped from the $11.50 range to where it is today, of course with a few dead cat bounces in between.
A few factors may be part of the reason for the decline, investors didn't see the interest grow in tthe stock with the major earnings annoucement or it could be the recent $115 million convertible debt offering, but even with that taken into account the stock really shouldn't be a little over $1 off its 52-week low of $6.50.
Our view is that Parker Drilling Company may be a victim of lack of press coverage and basically being dragged down by their sector with the sliding of Transocean, Inc (NYSE: RIG), Noble Corporation (NYSE: NE) and Diamond Offshore Drilling (NYSE: DO).
With offshore oil production sure to rise as we head into the winter months, Parker Drilling Company should be one of the beneficiaries of the additional growth. So their stock trading under $8 per share is more than attractive at this point but investors seem to be overlooking the true value of the company, we actually see Parker Drilling moving into the double digits within the 3rd quarter of 2007 as the need for their services and equipment increases.
Parker Drilling is currently trading at $7.75 on over 650,000 shares traded, down 20 cents: August 28, 2007.
Remember to do your due diligence and their corporate website can be a start, go to
www.parkerdrilling.com.
NAMC Newswire Note:
NAMC Worldwide provides Investment Banking consulting services to both publicly traded and privately held companies, everything from capital raising to mergers and acquisitions. Other areas of focus are Private Equity Capital Raising and Private Commodity Transactions.
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