This report outlines S&P's view of the small and mid-cap energy sector. S&P believes that supply/demand dynamics will continue to remain positive for the energy sector for the foreseeable future. In addition, the report looks at several valuation metrics for energy sector stocks, as well as current fundamentals (profit margins, cash flow generation, etc.). Energy sector companies have historically high levels of cash on their balance sheets, despite recent large share repurchases and debt reductions. S&P believes that cash will increasingly be used for capital investments, aiding small and mid-cap energy equipment & services companies. Ten small and mid-cap energy companies covered by S&P analysts are profiled.

Companies Profiled:
Smith International Inc. (SII)
Diamond Offshore Drilling Inc. (DO)
Ensco International Inc. (ESV)
Premcor Inc. (PCO)
Noble Energy Inc. (NBL)
Patterson-UTI Energy Inc. (PTEN)
Rowan Companies, Inc. (RDC)
Hydril (HYDL)
Hanover Compressor (HC)
Hornbeck Offshore Services Inc. (HOS)

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