It’s no secret that we’re bullish on natural gas as a primary energy source for the future.

So in the last issue, I covered Chesapeake Energy (CHK) as a pure play on the fuel itself. And today, I want to talk about a smaller, lesser-known company that will benefit from the bonanza in field services, a critical component of the coming natural gas boom.

You see, companies like Halliburton (HAL) and Schlumberger (SLB) are the major players in oil field services, and they’re poised to do quite well going forward. However, their high profile and limited growth prospects make them less appealing to investors looking for more dynamic profit opportunities.

That’s why I prefer Basic Energy Services (BAS).

Basic is a small player, flying under the radar of most investors. And looking forward, the growth potential is astounding if the natural gas story plays out as I think it will over the next few years.

Basichas positioned itself to service 80% of the existing oil- and gas-producing wells in the United States. It provides a range of services, including site preparation, drilling and well completion, and maintenance services for wells that have a life span of up to 50 years.

The goal is to keep the production flowing.

Basic is also a major consolidator in its industry, buying up smaller competitors and increasing efficiency, while also eliminating competition.

Yet its share price has come down significantly over the past two years. In 2011, Basic shares traded at almost $40. Today, they’re at $13.This is because natural gas prices are too low, which means less drilling activity and more maintenance activity.

Once prices rise, however, the other aspects of Basic’s services will begin to generate profits that are commensurate with increased drilling.

Make no mistake, Basic is profitable, financially strong and has the capacity to outlast the lull in natural gas prices. So at their current level, Basic shares represent a cheap entry point into the pick-and-shovel industry for energy services.

The big profits may not come immediately, but when activity picks up in earnest, the company will be able to leverage its footprint into real dollars that flow to the bottom line in a hurry.

I’m not the only one bullish on the company’s prospects, either. Insiders at all levels of the company’s executive suite are making a similar bet with their own money.

Here’s a list of recent insider transactions so you can see for yourself…

Insider Buying at Basic Energy

Remember, insider buying can be a deceiving indicator unless it meets certain criteria. The most important of which is cluster buying, where a group of insiders buy at various price points. Basic’s roster of buying, the size of the purchases and the prices paid are all pointing to significant confidence from those closest to the situation.

Bottom line: Basic is a stealthy, pure play in an industry that has some of the best growth prospects in the energy industry. It’s an opportunity that deserves more than just a cursory look.

And “the chase” continues,

–Karim RahemtullaSource: Wall Street Daily

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