3 Oilfield Services Stocks Set to Gain From Solid Industry Prospects

Industry Overview - The Zacks Oil and Gas - Field Services industry provides support services to exploration and production companies, including well maintenance, drilling equipment leasing, and seismic testing [3] - The industry is positively correlated to upstream expenditures, with companies expanding into liquefied natural gas (LNG) facilities to capitalize on contracts and reduce carbon emissions [3] Current Market Dynamics - Demand for oilfield services is expected to remain strong as upstream businesses, like those of Exxon Mobil Corporation, are likely to be profitable despite low oil prices due to advancements in drilling technologies [1][4] - The price of West Texas Intermediate (WTI) crude is currently below $60 per barrel, yet exploration and production activities in areas like the Permian Basin remain profitable due to lower break-even prices [4] Financial Health - The industry has a low debt exposure, with a composite debt-to-capitalization ratio of only 32.6%, allowing companies to navigate challenging business environments effectively [5] - The current trailing 12-month EV/EBITDA ratio for the industry is 7.96X, significantly lower than the S&P 500's 18.56X, indicating potential undervaluation [14] Technological Advancements - Oilfield service companies are increasingly providing smarter technologies to help upstream companies reduce costs and emissions, leading to higher demand for electric subsea systems and digital monitoring technologies [6] Industry Outlook - The Zacks Oil and Gas - Field Services industry holds a Zacks Industry Rank of 53, placing it in the top 22% of over 250 Zacks industries, indicating solid near-term prospects [7][8] Key Players - Halliburton Company (HAL) is well-positioned with a strong presence in all stages of the oilfield lifecycle and is focused on cleaner energy solutions, currently holding a Zacks Rank of 2 (Buy) [17] - Oceaneering International, Inc. (OII) is recognized for its robotic solutions and is expected to see growth in its Aerospace and Defense business, currently holding a Zacks Rank of 1 (Strong Buy) [19] - Baker Hughes (BKR) is also well-positioned to benefit from ongoing exploration and production activities, supported by a strong balance sheet for growth and acquisitions [21]