Yesteday we announced that Lexington Energy Services (OTCBB: LXES) has been added to our “StockGuru’s Best Choices for 2007″
Let’s discuss the results of oil and gas companies working in Canada.
2007 is here. 2006 saw oil and gas companies working in Canada continue their streak of historically high profits, with margins over 20 per cent. Can they keep it up this year?
Chances are you’ve probably heard about the biggest thing to happen to the oil industry in decades: Alberta’s oil sands. CBS’s 60 Minutes did a show about them and Forbes magazine in currently working on an entire pull-out section on investing in Alberta.
The future of Canada’s considerable oil industry lies in Alberta’s oil sands. Production is currently at about 1 million barrels a day and profitable. Well over $100 billion in investments is scheduled to push triple or quadruple production over the next 10-15 years.
But there are still risks. Oil companies are plagued by increasing costs pushing their projects over budget and draining profits. But many of those increased costs are going to increasingly profitable energy service companies like Lexington Energy Services Inc. The overall market capitalization of energy service companies has tripled over the last few years – out-pacing oil and gas company growth by 50 per cent.
The forecasters at Canada’s Bank of Montreal recently published their estimates for 2007/08 and said that Alberta’s oil and gas services sector is poised to become the fastest growing industry in Canada. Growth in the sector has averaged more than 6 per cent over the last five years and is expected to grow at around 10 per cent over the next two years. Lexington Energy is at the right place and the right time.
More to come on my visit to Calgary offices of Lexington Energy Services… Keep on reading!
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