There is so much exploration and development spending in the oil and gas business these days that energy service companies are chomping at the bit for new employees. They just can’t get a hold of enough skilled personnel to handle all the business from oil and gas producers.
Everybody knows that this is a cyclical industry, but when the price of oil trades for $50 to $60 per barrel for a consistent period of time, the business cycle definitely gets longer. Even natural gas prices are trading at high levels, and demand for this commodity is extremely robust.
One of the most exciting service companies at the present time is Calfrac Well Services Ltd. (TSX/CFW). I’ve talked about this Canadian company before in this column. The stock is presently breaking out of a recent consolidation, and the company is firing on all cylinders trying to keep up with demand for its well fracturing services.
According to The Independent Petroleum Association of America (IPAA), total U.S. natural gas demand is expected to increase throughout the rest of this decade and expected to grow at an annual rate of approximately 1.8%, to reach 30.7 trillion cubic feet (Tcf) of demand, through 2015.
At the same time, U.S. natural gas production is forecasted to grow to 24.8 Tcf by 2015. This means that there is going to be a significant gap between natural gas demand and supply. In other words, the U.S. is going to be importing more and more natural gas from Canada. Not surprisingly, the natural gas business in Western Canada is already booming. Also not surprisingly, there are all sorts of great investment opportunities on the Canadian stock market at this time.
Calfrac Well Services Ltd. is but one example of many companies producing record financial growth, serving the booming energy industry in Western Canada. With the added bonus of strong currency fundamentals, Canadian stocks in this market sector should outperform considerably over the next several years.