2026-01-23 15:35Summary of Global Oil Services Conference Call Industry Overview - The focus is on the Global Oil Services industry, with a specific outlook for 2026 highlighted in the report [1][2]. Core Insights and Arguments - The report suggests that the oil services sector may be at an inflection point, primarily driven by changing investor perceptions rather than fundamental economic shifts [2][3]. - Investor interest has been historically low, but there are signs of a shift as the sector's valuation improved from 1.3x EV/Revenue in October 2025 to 1.44x in December 2025, following positive earnings calls from major companies [3][19]. - Thirteen relevant themes have been identified for the oil services sector, with five expected to gain momentum in 2026: 1. Investor interest 2. The Middle East 3. OCTG (Oil Country Tubular Goods) 4. Exploration 5. Digital advancements [4][23]. Key Themes and Trends - The Middle East is expected to see a significant increase in capital expenditures, particularly with Adnoc launching a $150 billion capex plan for 2026-2030 [4][24]. - OCTG volumes are anticipated to rise in the second half of 2026, with potential price increases due to steel tariffs and improved pricing power [4][24]. - Exploration spending is set to increase, with companies like Chevron planning to boost exploration capex by approximately 50% [4][24]. - The Digital sector is highlighted as a growth area, with companies like SLB and Adnoc investing in AI tools to enhance operational efficiency [4][25]. Financial Strength and Valuation - The oil services industry is reported to be in a stronger financial position compared to previous cycles, with a CFO-to-revenue ratio of 15%, a net-debt-to-assets ratio of 14%, and a ROIC of 9% [26][27]. - Despite a supportive macro environment, investor engagement in the sector has not met expectations, indicating potential for future growth [7][26]. Investment Recommendations - The report lists preferred stocks for 2026: - Tenaris (Target Price: €21) - SLB (Target Price: $52.3) - Vallourec (Target Price: €22.6) - Saipem (Target Price: €3.54) - Subsea 7 (Target Price: NOK240) [5][41]. - Short-term trading opportunities are identified in Technip Energies, GTT, Viridien, SBM Offshore, and Rubis [5][41]. - Long-term value is seen in Adnoc Drilling and Adnoc L&S [5][41]. Additional Insights - The oil services sector has largely decorrelated from oil prices since 2022, indicating a shift in how the sector's performance is influenced by oil market fluctuations [32][36]. - The free cash flow for the industry reached $26 billion in 3Q25, surpassing the previous peak of $15.5 billion in 2015, reflecting strong cash generation capabilities [37][39]. Conclusion - The Global Oil Services industry is poised for potential growth in 2026, driven by improved investor sentiment, strategic capital investments in the Middle East, and advancements in digital technology. The financial health of the sector supports a positive outlook, with several companies identified as key investment opportunities.