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My Favorite Oil Services Stock

Leo Nelissen profile picture
Leo Nelissen


  • Oil service & equipment providers are in a very good spot right now.
  • Helmerich & Payne not only saw its market share rise by 5 points, it is also poised to go even higher.
  • This company offers a great combination of a strong product portfolio, great balance sheet and a supportive fundamental environment.

Onshore oil & gas drilling service providers are in a very favorable environment of accelerating demand along with higher oil prices and high expectations. Helmerich & Payne (NYSE:HP) is one of the strongest players in its industry and a beautiful stock to be long.

Source: Helmerich & Payne

The Market Is Tightening

On March 31st I wrote an article which covered the most recent Dallas FED Energy Survey. This survey discusses the outlook from energy companies and offers a few interesting comments.

Article: 'What To Expect From Oil Companies According To The Dallas Fed Energy Survey'

Not only did the survey print another strong month at 40.7 points, it was also the 8th consecutive quarter above the 0% growth mark. Note that this index went positive shortly after the commodity bottom of the first quarter of 2016.

To avoid rewriting the entire article, let me show you my takeaway from the previous article:

American E&P companies are witnessing an environment of higher production at higher prices. However, this comes at a price. Both equipment and employment are getting increasingly expensive, and this is putting tremendous pressure on small companies with high operating costs. On the other hand, equipment providers are busy providing equipment at rapidly growing utilization rates. It's a good environment in which to be long both E&P and equipment companies, even though we could face headwinds from rising production in the long term.

It's clear that especially onshore equipment providers need to be in charge of cost control and the latest innovation to grow or even capture more market share. And Helmerich & Payne is doing exactly that.

Helmerich & Payne Is Feeling The Upswing

Just recently, Helmerich & Payne presented at the Scotia Howard Weil 46th annual energy conference. The company highlighted a few drilling market conditions that perfectly support the

ChartHP data by YCharts

ChartHP data by YCharts

ChartHP Financial Debt to Equity (Quarterly) data by YCharts

This article was written by

Leo Nelissen profile picture
Welcome to my Seeking Alpha profile!I'm a buy-side financial markets analyst specializing in dividend opportunities, with a keen focus on major economic developments related to supply chains, infrastructure, and commodities. My articles provide insightful analysis and actionable investment ideas, with a particular emphasis on dividend growth opportunities. I aim to keep you informed of the latest macroeconomic trends and significant market developments through engaging content. Feel free to reach out to me via DMs or find me on Twitter (@Growth_Value_) for more insights.Thank you for visiting my profile!

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in HP over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

This article serves the sole purpose of adding value to the research process. Always take care of your own risk management and asset allocation.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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