Exterran (NYSE:EXH) is another ignored oil-services firm. However, investors may want to put it on their lists.
EXH is one of the largest providers of natural gas compression equipment and services in the world. After extraction, natural gas needs to be “squeezed” in order to send it through pipelines and other midstream infrastructure. The company also provides the various pieces of equipment needed to process that gas once it’s out of the ground and compressed.
As producers have shifted away from dry gas and toward shale oil, the demand for Exterran’s compression services has dwindled. However, as more wells are tapped in dry gas regions — like the Marcellus — E&P firms should be calling Exterran in spades.
The firm also has another ace up its sleeve: a master limited partnership (MLP) subsidiary. EXH is the general partner of Exterran Partners (NASDAQ:EXLP), which provides contract compression services. Those contracts result in hefty tax-deferred distributions for EXH.
All in all, Exterran is an interesting pick to play the well after the initial drilling has been done.