Goldman Sachs analyst Waqar Syed recently went to Houston to meet with management from oil services companies Schlumberger Limited. SLB 1.34%, Halliburton Company HAL 3.4%, Patterson-UTI Energy, Inc. PTEN 3.28%, Oceaneering International OII 1.47% and National–Oilwell Varco, Inc. NOV 2.84%. According to Syed, the companies are already beginning to see green shoots in key business segments.

Takeaways

Syed listed four key takeaways from the meetings:

1. The number of customer inquiries have been on the rise in recent months, particularly regarding U.S. projects.
2. E&Ps are remaining disciplined so far in the face of $50/bbl oil. Management from the five companies told Goldman that $55–$65/bbl oil prices will be needed to meaningfully boost activity.
3. The companies expect U.S. land rig activity to increase slowly n Q4 and then begin to pick up rapidly in 2017. They also predict that the recovery in deepwater activity won’t happen until 2018.
4. Highly specialized oil services companies (Schlumberger, Hallibutron, Patterson-UTI and Oceaneering International) expect to pick up market share throughout the oil market recovery.

A Name Apart

Syed said Schlumberger clearly differentiated itself from the other companies.

“SLB sees opportunities for market share gains in the next upcycle, as it now stands in a unique position in oil services with respect to the breadth of product portfolio, extent of geographical reach, strength of balance sheet, technology prowess and the ability to offer unique customer solutions,” he explained.

Goldman has…

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