Energy

1) Blueshift's oilfield sources expect capital spending to increase 10-15% Y/Y in North America next year. 2) There is a new trend underway in E&P structural realignment that may slow the hiring of more rigs. 3) Helmerich & Payne, Patterson-UTI Energy and Precision Drilling to benefit the most from a tight drilling market in 1H23. 4) Increases in wellsite intensity to benefit integrated pressure-pumping companies such as Halliburton and Liberty Energy; ProPetro is one to watch. 5) Strong demand for offshore drilling remains intact. 6) Nabors Industries’ new robotic rig technology is gaining traction.

Report by Kailash Capital Research

US energy companies need to spend more to remain a dominant global player. The good news is that we are now likely to be in the early innings of a long-overdue cycle of energy investing. The KCR team points to an interesting chart (chart 2) indicating that lower capex is expressing itself, predictably, in the deployment of fewer rigs than history would suggest. Yet despite this, the US has managed to smash production records thanks to large improvements in technology in land drilling. These new “super spec” rigs could present lucrative returns and Nabors Industries stands out as a terrific opportunity that will exceed very low expectations in the analyst community.