These companies take a beating when prices are low. That’s mainly because it takes a lot of capital to own and operate drilling rigs. As they say in the industry, “ If it’s not running, it’s rusting .” And new technically advanced computerized rigs are expensive. But nothing can replace the expertise and value of the top drilling contractors. Those with experienced crews and solid equipment will be in demand during the next bull market in oil. In addition, a small group of specialized drilling contractors operate in severe conditions or up to 11,000 feet under water. The remaining large conventional reservoirs of oil and natural gas are most likely located in these climates... And many are deep below the surface of the Gulf of Mexico. While low prices punish drilling contractors, the flip side is also true: As prices rise and the supply of capable equipment stretches thin, these companies can charge almost whatever they want. Like with everyone else in an oil boom, these guys will make a lot of money. If you stick to the guidelines we’ve outline in this chapter when investing in the resource space, you’ll be able to build a successful portfolio for the long term. As oil demand skyrockets, these specialty contractors will reap the rewards.
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