There's another way of investing in the energy rush, writes Trevor Hoey.

SPECIFIC oil stocks like Woodside and Oil Search aren't the only means of making money from the soaring price of crude.

One way of getting a piece of the oil and gas action is to identify companies that service the giants. This is an area that has traditionally been dominated by global goliaths based outside Australia - and still is, to a large extent. There are some exceptions and here are three local companies that are well worth a second look.

WORLEYPARSONS

In 2004, the Australian-based Worley Group recognised the benefits of being able to offer a combined onshore and offshore service for industry and formed WorleyParsons, a company that has achieved strong growth and made several acquisitions that have enhanced its international operations.

Since 2004, WorleyParsons' share price has risen from less than $5 to a high of more than $50 in 2007. Although it is now trading in the vicinity of $40, its share price had probably run ahead of itself, particularly given that the company's recent trading range reflects a price-earnings multiple (the ratio of a company's share price to its per share earnings) of about 26 relative to 2007-08 consensus forecasts.

WorleyParsons is a $9 billion company operating in an industry where size counts. Large producers that require quick access to complex and expensive equipment as well as large project teams, like Shell, Woodside and Chevron, tend to favour global players with an extensive asset base and workforce.

Since delivering a net profit of $152.7 million for the first half of 2007-08, Worley has continued to win high-profile contracts in Australia and overseas. The award of a $190 million contract by Woodside Energy that includes the installation of a second platform in the North West Shelf region demonstrates Worley's acceptance in the local market.

WorleyParsons has also been active on the international stage with its Canadian subsidiary, Colt WorleyParsons, formed after last year's acquisition of Colt, being awarded a substantial pipeline project. Also, a $40 million refinery modernisation and expansion project that was awarded by Petrom, Romania's largest oil and gas group, could be the start of a significant new revenue stream as the company embarks on a three-year development program valued at $1.8 billion.

Neptune Marine

This is another offshore oil and gas services company that has benefited from expanding into international markets. Having acquired and integrated eight new businesses over an 18-month period for a total consideration of nearly $100 million, Neptune's emergence from an unprofitable minnow to a serious competitor in the offshore oil and gas services market has been impressive.

Neptune's size is better measured by the range of services it can offer than by the market capitalisation figures that a company like WorleyParsons boasts. Furthermore, Neptune should be considered a medium to long-term investment proposition, as this year's net profit of about $10 million should grow substantially in 2008-09.

Neptune's earnings per share are expected to rise from 3.3? in 2007-08 to 8? in 2008-09, according to consensus forecasts. This represents a P/E ratio of about six relative to 2008-09 estimates, suggesting the market has not factored in the company's growth profile.

Revenue from two contracts involving Neptune's higher margin businesses was unexpectedly deferred, resulting in a transfer of some of the anticipated 2007-08 profits to the 2008-09 financial year. While this may have contributed to a downturn in Neptune's share price it should be remembered that the company's substantial maiden profit will represent a strong turnaround from the previous year's loss of $6.7 million.

Neptune's suite of sub-sea services, including its patented underwater welding technology, is the main point of difference between the company and its competitors. It is this "cradle to grave" offering that should continue to attract new customers and strengthen existing relationships.

Mermaid marine

Neptune is working in the Gulf of Thailand in partnership with Mermaid Marine, another prominent Australian-based oil and gas services provider. Since listing on the ASX in 1999, Mermaid Marine has become Australia's largest marine services provider to the offshore oil and gas industry.

Mermaid's supply bases in Dampier and Broome in Western Australia, combined with the company's fleet of more than 20 vessels, leaves it ideally placed to service the current and emerging logistical needs of operators in the Browse Basin and North West Shelf. Mermaid has long-term contracts with a range of high-profile clients. The company's Singapore subsidiary, Mermaid Marine Asia, will co-ordinate an important multi-vessel contract with Geokinetics, a leading geophysical services company based in Texas. The company has global operations that cover most offshore regions where oil and gas exploration and production occurs.

The Geokinetics contract is significant for Mermaid Marine because it involves the supply of three vessels for a minimum of 12 months and an 18-month charter of its vessel Mermaid Discovery to assist the company in collating seismic data in Egypt.

The initial revenue from this contract is more than $40 million with a strong prospect of further income as Geokinetics continues its data collection activities especially in the Australian and South East Asian regions.

Based on consensus forecasts for 2007-08, Mermaid Marine's P/E ratio is about 14. Following a $36.3 million capital raising in May, management will expand Mermaid's fleet and further develop the company's supply bases to meet increasing logistic demands, particularly from activity in the Gorgon gas fields that is estimated to contain about 40 trillion cubic feet of gas.