Dresser-Rand Group (NYSE: DRC) is among the largest global suppliers of turbines, compressors and other high-speed rotating equipment primarily to the oil, natural gas and petrochemical industries. Oil- and gas-related markets accounted for roughly 83 percent of the firm’s 2010 sales, but the company’s products are also used by the US Navy and the paper, steel, sugar and power generation industries.

The company’s products are key components in all three segments of the energy patch: upstream (exploration and production), midstream (pipelines and storage facilities) and downstream (refining and marketing). For example, oil production ceases if a compressor stops pumping gas into a well, while a failed compressor will prevent a pipeline from transporting natural gas.

Dresser Rand divides its business into two segments, each of which accounted for about half the firm’s annual revenue in 2010: new-unit sales and aftermarket services.

New-unit sales should continue to benefit from a cyclical recovery in spending on exploration and production and investment in oil- and gas-related infrastructure.

In the upstream category, the company’s biggest growth opportunities are in offshore and deepwater markets, particularly in FPSO vessels and liquefied natural gas (LNG)-related infrastructure.

For example, Dresser Rand already delivered the world’s highest-density compressor to Japanese shipbuilder Modec (Tokyo: 6269, OTC: MDIKF) as part of an FPSO ordered by Brazilian national oil company Petrobras. A replacement for expensive carbon-dioxide pumps, this technology occupies less space on the vessel and reduce costs by USD5 to USD10 billion.

Once perfected and modified for subsea applications–to maximize output from mature fields, producers often put the compressor on the seafloor–this innovation could enable Dresser Rand to grow its share of the rapidly growing offshore drilling market.

Meanwhile, the company has also established a strategic alliance with Samsung Heavy Industries (Seoul: 010140) to provide compressors for LNG import and export projects as well as floating LNG rigs–imagine a mobile, offshore liquefaction facility. This agreement should enable the company to place its product on the many LNG-related projects on which Samsung Heavy Industries works.

Better still, once these new units are in place, the company enjoys a reliable revenue stream (and higher margins) from aftermarket service and parts. At present, management estimates the installed base of its compressors at almost 100,000 units–four times the amount of its closest competitor. The more units the company sells, the more follow-up revenue its aftermarket business will generate.

In the midstream space, Dresser Rand stands to benefit from rising demand for pipelines, processing plants and other energy infrastructure in both developed and emerging markets. In the US, for example, the rapid development of shale oil and gas fields necessitates massive investment in supporting infrastructure, much of which will require compressors.

In the downstream space, management estimates that the company has the opportunity to sell $50 million worth of equipment for every 200,000 barrels per day of refining capacity added in emerging markets.

Over the past decade, management has reoriented Dresser Rand’s business strategy to better reflect the growing importance of national oil companies and rising demand for energy infrastructure in emerging markets such as offshore Brazil and West Africa. The company continues to invest in expanding the global reach of its service centers, particularly in Brazil and the Middle East. Because of these efforts, Europe and North American accounted for only 56 percent of the firm’s 2010 revenue.

In recent years, the company has courted business in the environment services sphere, including waste-to-energy solutions, wind energy, energy storage and clean coal. Management has assured investors that many of its opportunities in this space don’t depend on government subsidies. Buy Dresser-Rand Group up to 55.