THE INCREDIBLE SUCCESS OF THE FILM Avatar and the world's growing interest in the 3-D theater experience has whetted investor interest in stocks tied to the technology, such as Imax, among others. Can the oil-exploration industry be far behind?

As it happens, 3-D is also coming to the exploration-and-production sector, and one of the technology leaders of 3-D seismic mapping is a mid-cap Norwegian oil-services company, Petroleum Geo Services. Data, provided by the company and its competitors, is poured over by E&P firms to help decide where to drill for black gold.

As has the market, Petroleum Geo's stock has risen sharply off March lows, to around 12.40 from 3. But it remains far below its high of 32 in 2008 when oil was skyrocketing to $147 per barrel. And now that oil has more than doubled in the last year to $73/bbl. from $30, the shares are worth a look if that rise in crude translates into more exploration activity, as it normally does.

For example, a recent Barclays Capital survey of nearly 400 exploration firms forecasts that 2010 global E&P expenditures will increase by 11% to $439 billion from $395 billion in 2009. That growth was probably twice as high as was expected just a few months ago. It would be a big change from 2009, when seismic-mapping revenue fell roughly 15%-20% from the boom year of 2008.

With crude oil up big, the "capex holiday" for oil companies is coming to a close, argues Andrew Dickson, a London-based managing partner at Dickson Capital Management, which owns a stake in the 3-D mapping firm.

More importantly for its stock, that level of spending hasn't yet been incorporated into consensus EPS (earnings per share) estimates, he adds. Analysts are likely underestimating the operating leverage Petroleum Geo has as the E&P industry responds to the higher oil prices. Dickson expects Petroleum Geo's business to trough in the second quarter before rising sharply as exploration activities ramp up.

After the second quarter, there will be an increase in the utilization of Petroleum Geo's mapping services and higher day rates, too, he says. "A lot of that will drop to the bottom line."

This isn't a call on oil going higher, but it needs to stay roughly around current levels.

Petroleum Geo shares trade at a P/E of 10 times 2011 consensus analyst EPS estimates of $1.28, but with the popularity of 3-D mapping likely to grow, the company should do $1.90 or even $2 per share, Dickson contends. As we move through 2010 and analysts look to 2011 EPS, "you're going to start to see an increase in consensus estimates for 2011 and 2012." When that happens, Dickson figures that investors will be willing to give Petroleum Geo a 12 P/E, for a price of $24.

It's not a given that E&P firms will hike budgets, but the allure of 3-D is hard to resist.

THE DOW JONES STOXX INDEX of 600 European firms fell 1.2% on the week to 246.96.