Cal Dive International, Inc.Houston, TX, United States (NYSE: DVR)

Exploration, Production Taking Off - High energy and gas prices are driving a boom in oil company spending for exploration and production, which means increased business for oil and gas field service companies. A semi-annual report released by Lehman Brothers predicts a 20 percent increase in 2008 exploration and production spending globally: 15 percent in the US and 11 percent in Canada. The predicted numbers, which are attributed to higher prices, are much higher than in the December 2007 survey.

Farther Out to Sea - Demand is pushing exploration, drilling, and production farther off the coastline to find oil in deeper waters, and it's in these areas where oil and gas field services companies increasingly have to operate. The record depth for drilling in 2003 was just more than 10,000 feet, but Chevron intends to push its latest well closer to 40,000. The deeper drilling depth requires additional technology, and the safety and equipment challenges for field service companies ultimately raise their costs.

Fewer Ships Results in Higher Costs - Oil and gas field service companies eager to tackle offshore drilling projects are missing a major component: drilling ships. The shortage of drilling ships is part of the reason prices are so high, according to industry experts. The New York Times reports that the cost of drilling is up 300 percent from 2002, and that oil companies are spending $100 million more for ships in 2008 than in 2007, when they can get them.