The 2013 All-America Research Team: Oil Services & Equipment, No. 2: Ole Slorer

After three years at No. 1, Ole Slorer of Morgan Stanley drops back to No. 2. The analyst “places high conviction behind his stock ideas and themes, and is never afraid to make nonconsensus investment calls,” applauds one client. Slorer believes that the industry is transitioning to single-digit growth, after a decade of midteens escalation, and forecasts that offshore-exposed subsectors will deliver higher relative expansion. Offshore production, especially deepwater, is expected to comprise “a growing proportion of the global supply mix,” he reasons, thanks to new technologies that have lowered costs and resulted in a flurry of discoveries. Accordingly, he recommends offshore drillers, such as Bermuda’s Seadrill, as well as companies that are leveraged to subsea technology. Examples include Houston-based FMC Technologies, Helix Energy Solutions Group, Oceaneering International and Schlumberger, his large-cap integrated favorite. Slorer is more cautious regarding the North American shale story, citing capacity overhangs in pressure pumping and land drilling that are likely to persist thanks to technology-related efficiency gains. With demand increasing for steel tubes and the crush-resistant sand used in hydraulic fracturing, he advises playing the shale opportunity through the companies that make those products — like Luxembourg’s Tenaris and U.S. Silica Holdings of Frederick, Maryland — rather than the oil services providers. — Carolyn Koo — Carolyn Koo