Over the next couple of weeks, 90 works of art from the estate of Pierre and Sao Schlumberger are slated for auction.
According to experts, the entire collection could sell for $85 million or more when it’s auctioned tomorrow and next week.
One painting by Mark Rothko, called “No. 21 (Red, Brown, Black and Orange),” has never before been on the auction block. In fact, it hasn’t even been exhibited since 1972, when it was at the Museum of Modern Art in New York…
“[The Painting] could easily achieve a price in excess of $50 million,” says Oliver Barker, an official at Sotheby’s.
Some other renowned artists such as Warhol and Picasso adorn the Schlumberger collection as well…
This Picasso portrait, “Les enfants,” could also fetch a price in the high six, maybe even seven-figure range.
Pierre Schlumberger, a celebrated oil billionaire, had spent his life accumulating the works of famous and accomplished artists such as Warhol, Picasso, and Rothko.
His fortune came from his father, Marcel, and his Uncle Conrad, who were French engineers that founded Schlumberger Well Services Corp. in the 1930s. Pierre took control of the company in 1953 after his father’s death.
Pierre passed away in 1986, while his wife Sao — the focus of a few of the famous pieces in their collection — died in 2007.
His oil services firm, now called Schlumberger Limited (NYSE: SLB), still exists today and is worth $125 billion.
Oil Services Billions Are Back
Thanks to the advent of hydraulic fracturing and horizontal drilling, oil services firms are now more valuable than ever…
Especially in the United States, where the fracking boom is drastically changing due to increased production levels and low oil prices.
Oil services firms that deal in frac sand, proppants, well concrete, chemicals, drill-bits, and even the flow and integrity of pipelines have become the new vogue in big-money oil deals and asset mergers.
It seems as though every morning when I scan the news, I hear word of a new deal in this sector.
Just this week, Dallas conglomerate Eagle Materials (NYSE: EXP) agreed to acquire CRS Proppants LLC for $225 million. CRS manufactures proppants for fracked wells. These proppants — such as sand — hold open fractures in the rock and allow oil to flow.
The deal will double Eagle Materials’ frac sand production as it attempts to grow its business. Previously, the company had only been working in the Eagle Ford, but now it is looking to move into the Permian Basin in West Texas as well.
Remember, this is just one of the M&A deals we’ve seen recently. There have been others, and more are definitely on the way…
Oil, gas, and services firms aren’t the only ones buying, either.
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Private Equity Wants In… And So Should You
Now that fracking has become such a moneymaker — especially on financial markets — private equity, banks, and hedge funds have smelled money and are flocking to Texas, North Dakota, and West Virginia.
A couple weeks ago, the $168 billion private equity firm Apollo Global Management bought Express Energy Services, one of the biggest private companies in Houston.
The company saw revenue of $374 million last year, so Apollo looks like it has sunk its teeth into a juicy future IPO or asset sale down the road.
The big picture here is that money is changing hands in different sectors of the industry now.
A few years ago, private equity companies were buying frackers and small drillers. Mergers were based on new tracts of land and big players buying their way into the shale boom with billions in tow.
Now, though, the big-money energy deals have gone midstream.
It makes sense, too. Even though oil prices hit record lows this month, the banks and private equity companies know oil services companies will get paid the big bucks even if drillers take a hit.
The oil services and pipeline infrastructure companies all collect the same fees from oil producers no matter what the price of oil does.
That’s why investors should focus on these firms for the near future. Many of them pay exorbitantly high dividends, and they offer stability in times when oil prices swing violently.
My colleague Keith Kohl will be unveiling a few of his best oil services and pipeline plays in about a month, so I suggest you keep your eyes open for them.
If you’d like to get started now, the SPDR S&P Oil & Gas Equipment & Services ETF (NYSE: XES) has seen a fear-mongered dip over the last two months…
The dip has offered an attractive buy on some of the best longstanding oil services firms. Schlumberger, among others, is a part of its holdings.
If you’re wary of buying a basket of these stocks, though, I suggest you wait for Keith’s coming recommendation. And keep your eyes open for the historic art auction taking place this week and next.
Good Investing,
Alex Martinelli
With an eye squarely focused on the long-term, Alex Martinelli takes the art of income investing to a higher level within the energy sector. His research has helped hundreds of thousands of individual investors identify well established companies that have a long history of paying out dividends to their shareholders. For more info on Alex, check out his editor’s page.
