Taking advantage of Brazilian energy capex opportunities through Oil & Gas Services
Many Exploration and Production companies such as Petroleo Brasileiro Petrobras SA, also known as Petrobras (PBR) are focusing a majority of their exploration and development effort on deep-water oil wells. In the last 5 years, 50% of the new well discoveries were in deep-water exploration, and Brazil represented 63% of worldwide deep-water well discoveries. With natural gas prices staying low, E&P companies have increased their efforts to secure larger stakes in crude oil production. For example, Petrobras forecast spending $141.8 Bn or 60% of their total costs on exploration and production through the 2012-2016 period.
This is great news for oil and gas services since the increased exploration and development capital expenditures will drive their revenue growth. Examples of companies that can take advantage of this trend are those that have rigs already in Brazil such as Diamond Offshore (DO) which has 12 rigs. A great way to capture the Oil and Natural Gas Services Industry growth while mitigating risks, such as rig downtime, would be to invest in ETFs such as SPDR S&P Oil & Gas Equipment & Services ETF (XES) that hold many of these companies within its portfolio.
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