This year will be the "sweet spot" for earnings at large oil
companies as high oil and gas prices boost margins, but ample capacity in the
oil service industry keeps a lid on costs, says Goldman Sachs. "We
forecast 2011 EPS growth of 27%," for the sector, it says.
Beyond 2012,
the industry is likely to face shrinking margins as operating costs soar again,
it says. "We expect a repetition of the 2006-08 experience of delays, cost
overruns and disappointments," it says. Says Royal Dutch Shell (RDSB.LN)
and Statoil (STO) are conviction buys for the European oil sector.