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OIH: Slowly But Surely, Oilfield Service Providers Will Recover

Apr. 01, 2021 3:16 AM ETVanEck Oil Services ETF (OIH) ETF5 Comments
Sarfaraz A. Khan profile picture
Sarfaraz A. Khan
8.91K Followers

Summary

  • OIH is the benchmark fund for the oilfield services industry, with more than $1 billion of AUM, and gives investors exposure to all of the leading service providers.
  • The oilfield service providers are slowly turning around as the commodity prices recover, energy demand rises, and the oil producers gradually increase drilling activity.
  • The turnaround, however, will be slow as some of the biggest oil producers, such as Chevron and EOG Resources, exercise caution and keep a lid on spending levels.

Oil Refinery, Chemical & Petrochemical plant
Photo by zorazhuang/E+ via Getty Images

The VanEck Vectors Oil Services ETF (NYSEARCA:OIH), which is the leading fund for oilfield service providers, has rallied this year and I believe it will continue to do well in the future as the

This article was written by

Sarfaraz A. Khan profile picture
8.91K Followers
Hey there, I'm Sarfaraz A. Khan - a seasoned financial writer and investor with a passion for uncovering hidden gems. I have a deep understanding of fundamental analysis and I specialize in writing about mid-cap and small-cap companies that are poised for significant growth. My investment philosophy is heavily influenced by the strategies of legendary investors like Warren Buffett and Benjamin Graham. I look for investment opportunities in companies that have strong fundamentals and can grow substantially over the long-term. I'm not afraid to venture into other areas of the market either. While I primarily write about mid and small-cap stocks, I also delve into ETFs and economic trends occasionally. I always aim to provide a balanced view and discuss risk factors in my articles so investors can make better decisions. Although I've been away from Seeking Alpha for a while, I'm excited to get back to writing and sharing my expertise with the community. Moving forward, you can expect to see two to three articles a week from me. When I'm not analyzing stocks or writing about finance, I enjoy reading about history, religion, science, economy, and following the latest developments in the energy and technology sectors.

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Comments (5)

Gray Drake profile picture
Fossil fuels are politically incorrect, but the demand for oil and gas is projected to be increasing through 2050. OIH seems like a safe bet --- with normal well depletion and global demand growth oil service revenue expansion should go on for decades.
pgace123 profile picture
Thanks for the article. As the world reopens with more vaccinations there will be much more travel. This will cause demand to increase during a period where supply is dropping. This should translate in producers doing very well and getting greedy again which will trickle down to the service companies. My biggest fear is Iranian barrels. The unexpected could be geopolitical conflicts that no one expected.
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Many of the companies that destroyed $OIH e.g. (OSD) have either reorg'd or was kicked out making $OIH a much better investment than the previous years..
Panzerman profile picture
Good article in a somewhat forgotten sector. You state:
"Additionally, I think OIH might underperform the broader energy sector during a downturn since many service companies have weak balance sheets and the risk of a decrease in cash flows can weigh heavily on their shares"

Would purchasing just SLB give a buyer a good position in the oil services area, while avoiding the weak balance sheet players??
pgace123 profile picture
@Panzerman if you compare SLB’s balance sheet to HAL’s, you will find that HAL’s is much stronger. With that being said, HAL has had a nice run compared to SLB.
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