Credit Suisse Upgrades 3 Names In Oilfield Services & Equipment, Downgrades 6

In light of an improving oil market, Credit Suisse has updated its outlook for the oilfield services space. The firm still believes stock picking is critical for now and has upgraded three names and downgraded six others.

Credit Suisse is now calling for U.S. production to grow from 10.3 mmbopd in 2016 to 12.7 mmbopd in 2018. In addition, the firm estimates an average U.S. rig count of 470 in 2016, 600 in 2017 and 718 in 2018.

Newpark Resources Inc NR was raised from Neutral to Outperform. The firm credits Newpark with several key international fluids wins.

Tetra Technologies, Inc. TTI was raised from Neutral to Outperform. The firm likes Tetra’s exposure to the North American land market and its differentiated technologies.

Hi-Crush Partners LP HCLP was raised from Neutral to Outperform. The firm likes its 100 percent exposure to the U.S. unconventional market and its low cost production.

Nabors Industries Ltd. NBR, Superior Energy Services, Inc. SPN and Forum Energy Technologies Inc FET were all downgraded from Outperform to Neutral.

Precision Drilling Corp (USA) PDS, Helmerich & Payne, Inc. HP and Patterson-UTI Energy, Inc. PTEN were all lowered from Neutral to Under-perform.

“The onshore land market looks to be over-supplied and somewhat significantly for the foreseeable future with enough competition even for Tier 1 rigs that any significant dayrate improvement should not be expected,” analyst James Wicklund concludes.

Wicklund sees Nabors as the cheapest of the group but still believes that the stock has little upside from its current level.

In the large cap space, Credit Suisse maintains Outperform ratings on Schlumberger Limited. SLB, Halliburton Company HAL, Baker Hughes Incorporated BHI and Weatherford International PLC WFT. 

The firm has an Under-perform rating on National-Oilwell Varco, Inc. NOV.

Disclosure: the author is long SLB, HAL and BHI.