A variable environment for the pricing of goods, led by the increasing trade voltage and strict capital management by Energy Firms Upstream, reduces the demand for oil field services, creating a challenging perspective for the Zacks oil and gas fields. Companies in this sector must skillfully navigate the developing landscape of the energy transition in order to succeed. Failure to follow the goals of the energy transition can adversely affect their cash flow.
Among the companies in the industry that will probably survive the business challenges are Technipfmc FTI, Oceaneering International, Inc. OII and Helix Energy Solutions Group, Inc Hlx.
For the industry
The industry of oil and gas services Zacks includes companies that are primarily involved in providing support services to survey and production participants. These companies help in the manufacture, repair and maintenance of wells, drilling equipment, leasing of drilling platforms, seismic tests and transport and targeted solutions, among others. In addition, companies help energy players upstream with the location of oil and natural gas, as well as to drill and evaluate hydrocarbon wells. Therefore, oil services are positively related to the costs of companies upstream. In addition, when countries around the world invest a lot in liquefied natural gas terminals (VPG), several oil service companies extend their scope outside the hydrocarbon fields and take advantage of production equipment used in liquefied natural gas facilities for reducing carbon emissions.
3 Trends determining the oil industry in the future
Exposure to variable oil and gas prices: The demand for oil services is mainly involved in research and production activities, as companies help players up the stream effectively create oil and gas wells. Given the reading of oil researchers and manufacturers of a variable and uncertain prices of goods, which is currently influenced by continuing tensions in the US and China, the business of oil service companies such as SLB and Halliburton is susceptible to insecurity.
Lower costs up: Although the script for the pricing of goods remains favorable for studies and production operations, and the prices of breakthroughs are much lower for the existing wells in the game of the slate, there is a delay in drilling activities, as the players upstream prioritize the returns of the shareholders, and not to increase the shareholders. Reducing the drilling shows a more demand for the services of oil deposits, as companies such as SLB and Halliburton, which mainly help operators up the stream in the creation of oil and gas wells, are adversely affected by this change.
Impacts from unsuccessful goals to transition energy to cash flows: The prosperity of the companies in the industry depends significantly on their admission in the navigation of the developing energy transition landscape. This covers the ability of oil service providers to deal with the decarbonisation of oil and gas operations effectively, while expanding the reception of inventive, low -carbon and neutral carbon technology. Therefore, if you do not achieve the goals of the energy transition, it will affect cash flow.
Zacks Industry Rank shows bear prospects
Zacks and gas field services are 22 -claus within the width of Zacks oil sector. The industry is currently wearing Zacks Industry Rank #220, which puts it in the lower 11% of over 250 Zacks Industries.
The Zacks industrial rank of the group, which is actually the average of Zacks rank of all members of members, shows gloomy short -term prospects. Our studies show that the top 50% of Zacks-ranked Industries outperform the lower 50% with a factor of over 2 to 1.
Before we present a few shares that you can think about, let’s look at the recent picture of the marketing market and the picture on the market.
Industry lags S&P 500 & Sector
The Zacks oil and gases industry is lagging behind the Zacks S&P 500 composite and the wider Zacks – Energy energy sector in the last year.
The industry dropped by 11.9% during this period against the increase of the S&P 500 of 12.9% and 3% improvement in the broader sector.
One -year price efficiency
The current evaluation of the industry
Since oil and gas companies are debt -loaded, it makes sense to evaluate them based on the EV/EBITDA ratio (Enterprise value/profit before depreciation and depreciation of interest). This is because the evaluation indicator reports not only equity but also the level of debt. For EV/EBITDA capital companies, it is a better evaluation indicator as it is not affected by the change in capital structures and ignores the effect of not money.
Based on the 12-month-old EV/EBITDA, the industry is currently trading at 5.95X compared to the S&P 500 17.59X and the 4.79X sector.
In the last five years, the industry has been trading by 12,87X and only 1,19x, with a median 8.11X.
Following the ratio of a 12-month enterprise to EBITDA (EV/EBITDA)
3 stocks of oil services trying to survive in industry challenges
Oceaneering International
Oceaneering is a well -known service provider and robotic solutions to offshore energy players. In the first quarter of 2025, OII witnessed a strong flow of a new business, while providing new orders worth about $ 1.2 billion. Currently Oceaneering wears Zacks Rank #2 (Buy).
Price and Consensus: OII
Helix Energy Solutions
While providing special services to the offshore energy industry, Helix Energy ended the first quarter of 2025 with a lag of about $ 1.4 billion. In this way, HLX provides stable cash flows for the coming months. Helix Energy, bearing Zacks Rank #3 (Hold), is also known for its proactive cost management and a strong discipline of capital expenditure.
Price and Consensus: HLX
Technipfmc
TECHNIPFMC has a very strong potential pipeline, with over $ 26 billion projects expected in the coming years. This provides future cash flows for Zacks #2 ranked FTI. You can see The full list of today’s Zacks #1 rank(Strong Purchase) Stocks HERES
Price and Consensus: FTI
Do you want the latest recommendations from Zacks Investment Research? Today you can download 7 best shares for the next 30 days. Click to get this free report
TechnipFMC PLC (FTI): FREE stock analysis Report
Oceaneering International, Inc. (OII): FREE shares report
Helix Energy Solutions Group, Inc. (HLX): FREE Stock Analysis Report
This article originally published for Zacks Investment Research (Zacks.com).
