[Editor's note: This story is the final installment of a three-part outlook series which appears in the December 2018 edition of Oil and Gas Investor. Subscribe to the magazine here.]
The oilfield service sector is making a comeback as margins have improved, but investors remain wary of the industry that bottomed out in 2016 when oil prices slumped.
As oil prices have rebounded and stabilized, drilling activity has also ramped up. The Baker Hughes Inc. (NYSE: BHGE) rig count rose on Oct. 19 to 1,067 after a decline that bottomed at 316 in May 2016.
While the Permian Basin rig count rose slightly in October, it retrenched in August and September. Some of the lower-end Permian rigs could be “laid down” toward the end of the year, but the super-spec rig count “continues to progress with some upgrades expected to commence work in the fourth quarter,” wrote Luke Lemoine, an analyst and CFA for Capital One Securities, in a research report.