Readers of this space know that one argument forwarded here is that in the era of elevated energy prices the oil/natural gas services sector is likely to remain strong for the foreseeable future, barring the discovery of cheap, widely-available alternative energy. And among oil/natural gas services companies, Superior Energy Services is worth a review.

Superior Energy Services, Inc. (NYSE: SPN) provides specialized oil field services to oil and gas companies operating in the Gulf of Mexico and on the Gulf Coast. The company also sells and rents oil/gas well drill equipment and tools on four continents.

In general, analysts like SPN's rental tools and intervention services businesses, and the fact that SPN's services help oil/gas companies maintain production during seasonal down periods, which anesthetizes SPN somewhat from commodity price volatility.
Further, international expansion opportunities are promising, and if undertaken they would have an added safety benefit for SPN: increased international operations would lessen the earnings impact of a downturn in key Gulf of Mexico operations. The Reuters FY 2007/FY 2008 EPS consensus estimates for SPN are $3.37 to $4.27.

The limitations? Reduced demand for SPN's production-oriented services and/or a large, sustained decline in energy prices, particularly oil, would hurt SPN results.

The First Call mean rating for SPN is: Strong Buy [6 firms]. Mean 2008 target: $47.00 [high: $51, low: $44].

Stock Analysis: Superior Energy Services is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than 2 years should be rewarded from SPN's shares. Sell/Stop Loss if you were to purchase shares in this company: $27.

Disclosure: Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.