Large oil equipment and services companies are reaping the benefits of a North American drilling renaissance — in shales and other hard-to-reach oil reservoirs — brought forth by a coupling of high oil prices and drilling technology developments, says Scott Gruber, Senior Research Analyst at Sanford C. Bernstein & Co., LLC.
“These were assets that historically the industry has known about, but we haven’t had the combination of elevated commodity prices and the technology and technical expertise available to extract these at economically viable rates of return. And now they’re attractive,” Gruber said.
Gruber points to Baker Hughes (BHI) as one of the dominant providers of directional drilling in North America, one key technology used to drill in hard-to-reach oil reservoirs. BHI also recently acquired BJ Services, which adds synergistic capabilities to its product suite.
“They moved away from a product-line structure and toward a geo market structure, so they now have geo market heads that are selling the full product suite and acting as liaisons with customers to execute more complex multiservice packages,” Gruber said. “This should yield market share gains, both domestically and abroad.”
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