- Even if oil prices rebound, oilfield services firms have a tough year ahead as producers squeeze them for deeper discounts, Moody’s says in a new analysis, predicting that the industry is headed for a “deep, protracted cyclical downturn."
- Because many oil companies are drilling but not completing wells, oil services firms that provide production-related services will fare better than those offering pressure pumping, seismic services and other exploration-type activities.
- No company is immune, but the big three - Schlumberger (NYSE:SLB), Halliburton (NYSE:HAL) and Baker Hughes (BHI) - are best positioned because they are large, diverse, well-funded and have operations outside of North America, Moody's says, while Paragon Offshore (PGN) and Hercules Offshore (NASDAQ:HERO) will see the sharpest decline in earnings as contracts expire for their fleet of older-generation jackup rigs.
- Moody’s expects to see more offshore firms stack rigs, delay rig deliveries and write down assets as contracts get changed or canceled;lLand drillers will not fare much better, particularly those operating in expensive U.S. shale plays.
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