Go West, Young Man; East, North, South, Too

If you're looking for work in the oil and gas industry, it helps if you like to travel.

Most firms that provide gear and services in the oil fields are based in the U.S. But a growing number of jobs are overseas, including those involving offshore deep-water reserves.

With supply dwindling and demand growing, exploration and production companies are high-tailing it to newer, untapped pools in such places as offshore Brazil, West Africa, Southeast Asia and Russia.

These regions are areas of opportunity for rig outfitters. E&P companies need huge, floating rigs or bottom-hole horizontal wells that extend from the shoreline.

The biggest increases in reserves last year were in Brazil and Kazakhstan, according to Energy Intelligence.

Large international projects provide contractors with a more stable stream of revenue since they're often multiyear projects. Reserves in deep-water fields are expensive to drill, but margins are higher than those from well work in shallow water and on land.

They're hostile environments. Since drills are getting closer to the core of the earth, temperatures are hot and the pressure is high. Tools to operate in that kind of environment weren't available a decade ago.

The number of rigs in operation outside North America has been climbing steadily over the last couple of years.

Analysts expect the trend to continue, with around 100 new rigs or so a year coming on line in foreign fields. In 2006, the international rig count totaled 925, up from 908 in 2005, according to Baker Hughes BHI.

The outlook for deep-water rigs is especially strong.

"There's a lot of interest in drilling in deep water, but there's not enough floating rigs in the deep-water markets," said Joe Agular, analyst with Johnson Rice. "So there are commitments by big oil companies to build more (deep-water) rigs."

Many are expected to hit the market in 2008 and 2009.

Many of the big oil companies on hiring sprees are fully or partly owned by national governments.

Half of the 20 firms in Energy Intelligence's Top 20 performing oil companies in 2006 were state-controlled. The biggest gainers were hybrid, partly state-owned companies from emerging economies including Russia, China and India.

Some government-owned oil companies such as Russia's might want to horn in on projects run by big majors such as, say, Royal Dutch Shell RDSA. But they still need the know-how of oil-field services companies, that have the latest technologies and trained personnel to handle increasingly complex drilling projects.

Suppliers are shying away from the nationalized oil operations of the leftist Hugo Chavez's Venezuela. But Baker Hughes, National Oilwell Varco NOV, Smith International SII, Weatherford WFT and other American supply and services firms are busy working for national oil firms based in Russia, Saudi Arabia and Brazil, among other far-flung locales.

Baker Hughes, for example, recently won a $500 million, three-year contract from Brazil's well-run national oil company Petrobras PZE, for deep-water directional horizontal drilling.

Saudi Arabia's national oil company Saudi Aramco has been particularly active over the last couple of years in expanding the number of rigs to grow production. Among the recipients of that activity are Baker Hughes, Smith and Weatherford.

OPEC kicks in supply when the rest of the world's peters out. And in many key regions, supply growth is flat or down.

"The U.S. is in decline. Canada is in decline. Mexico is in decline. The North Sea is in decline. Norway is in decline," said Michael Henzi, senior energy analyst with Sterne, Agee & Leach. "So you have to have all this growth in other areas."

Those other areas, he says, range from Trinidad and Egypt to Russia and Brazil. Southeast Asia and West Africa are other regions with large offshore reserves with lots of potential, though political unrest in Nigeria is slowing growth.

The International Energy Agency reports that about 90% of new hydrocarbon supplies will come from developing nations over the next two decades.

"The international part of our business is growing the fastest," said Pete Miller, chief executive of National Oilwell, which makes a range of products for oil rigs.

He says much of that growth has come in the last several months. About 75% of the firm's backlog is comprised of overseas orders.