Insight: 2019 Could Bring Gains For Recovering Oilfield Services Sector

The year could bring increased oilfield services (OFS) earnings as operators pump more oil, including in U.S. shale plays, but don’t expect that to translate into rapid gains early on for the recovering sector.

Oil prices and E&P spending will be among the factors.

Analysts with Moody’s Investors Service caution that the health of the OFS sector is “still quite weak,” with many burdened by high debt and added pressure brought by the drop in crude prices in late 2018. But the sector could see a 10% to 15% increase in overall earnings in 2019 as E&Ps increase spending.

“Most of that growth will likely come only later in 2019 after the heightened oil-price volatility of late 2018,” Sajjad Alam, vice president-senior analyst for Moody’s, said in a Jan. 3 report. “Infrastructure constraints in the Permian Basin will also limit OFS operators’ ability to raise prices early in 2019.”