Portfolio of Oil Service and Drilling Stocks

Oil service and drilling companies service and drill oil and natural gas wells. The amount of business activity for these companies depends on the price of oil and natural gas. As prices rise there is more business activity as new wells are drilled and existing wells are upgraded. This increased activity is felt through out the entire industry, as more drilling rigs, support services and materials are required.

Most oil service companies are cyclical and their stock prices track the price of oil and natural gas. So it is best to buy them at the beginning of a new price cycle when prices are low and dividend yields are high. And the Philadelphia Oil Service Index (^OSX), which includes fifteen of the largest oil service companies, generally follows the price of oil and natural gas.

Some of these companies pay reliable dividends so the stocks are appropriate for a long-term dividend reinvestment portfolio.