Recovering Chinese Economy Sparks Record High Demand for Oil

Posted On January 25, 2013 | by AllenCaron

China’s economy is recovering, according to media reports, and with it comes a significant increase in its demand for oil. According to Platts, China’s oil demand reached record highs in December, suggesting that demand for 2013 will also spike.

Citing data from China’s National Bureau of Statistics, the Platts report noted that China’s economy rebounded by 7.8

Photo courtesy of heatingoil.com

Photo courtesy of heatingoil.com

percent in the fourth quarter of 2012 after bottoming out in the third quarter. Along with that recovery, China’s oil demand rose 7.7 percent year on year in December, or an average of 10.58 million barrels per day, the highest on record. Oil demand “was boosted by record refinery throughput.”For the entire year 2012, oil demand in China averaged 9.68 million barrels per day, a 3.4 percent increase over 2011. If the government continues its stimulus measures and the economy continues to improve, “growth this year could surpass” these figures, the Platt report noted.

This report prompted another look at small cap oil services and oil industry stocks.  Here are four we started following back on Aug. 1, 2012 and two others we have added to the list:

Houston-based Flotek Industries (NYSE: FTK, http://www.flotekind.com/), a company that develops and supplies a portfolio of drilling and production related products and services to the energy and mining industries worldwide, closed back on Aug 1 at $9.71 with a market cap of $480 million. When we checked a little over a month later on Sept. 11 it closed at $12 and its market cap was $596 million. On Jan. 24, FTK closed at $13.44, down 8 cents for the day. Its 52-week trading range is now $8.46-$14.73.

Norwalk, CT-based Bolt Technology Corp. (Nasdaq: BOLT, http://www.bolt-technology.com/) operates in the offshore drilling segment. It manufactures and sells marine seismic data acquisition equipment and underwater robotic vehicles. In January 2011 Bolt purchased SeaBotix Inc. BOLT closed Aug. 1 at $14.45 and Sept. 11 at $14.90, with a market cap of $126 million. BOLT closed Jan. 24 at $15.43, up 3 cents for the day. Its 52-week trading range is now $11.65-$16.09.

Houston-based Tesco Corporation (Nasdaq: TESO, http://www.tescocorp.com/) operates in four divisions serving drilling contractors and the oil and natural gas industry: Top Drives, Tubular Services, Casing Drilling and Reseach and Engineering. In October 2011 Tesco purchased Premiere Casing Services-Egypt SAE. Back on Aug. 1, TESO closed at $11.31. By Sept. 11 it had dropped to $10.39. On Jan. 24, TESO closed at $11.86, down 16 cents for the day. Its 52-week trading range is now $8.70-$16.88.

The Woodlands, TX-based Newpark Resources Inc. (NYSE: NR, http://www.newpark.com/) provides products mainly to the oil and gas exploration industry. It operates in three segments: Fluid Systems and Engineering, Mats and Integrated Services, and Environmental Services. In April 2011 it acquired the drilling fluids and engineering services business from Rheochem PLC. Back on Aug. 1 it closed at $6.68 and by Sept. 11 it was up to $7.67. On Jan. 24 it closed at $8.35, up 2 cents for the day. Its market cap is now $725 million and it 52-week trading range is now $5.19-$9.82.

The Woodlands, TX-based TETRA Technologies (NYSE: TTI, http://www.tetratec.com/) has five different business segments including oil and gas exploration, a products and services segment serving the oil and gas industry, and production testing. Since March 2012 TTI has made three acquisitions. TTI closed Jan. 24 at $8.55, up 3 cents for the day. Its market cap is now $668 million. Its 52-week trading range is $5.35-$10.66.

Houston-based Cal Dive International (NYSE: DVR, http://www.caldive.com/) is a marine contractor specializing in platform installation and salvage services, pipe inlay and burial for a diverse customer base in the oil and natural gas industry. DVR owns a fleet of 29 vessels and barges. It closed Jan. 24 at $1.74, up 5 cents for the day. Its market cap is now $169 million and its 52-week trading range is $1-$4.

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