After two years of low or declining commodity prices and low rig counts, signs have began to emerge that oil and gas markets may finally be on the path to recovery. With some stability in commodity prices, the question now is whether the oil market's optimism will hold while drillers enter budget planning season over the next few months.

In our 2H 2016 Oilfield Services Report, we discuss several themes affecting players in the Oilfield Services sector, including:

  • Capital markets are open for business. After being effectively shutout of public equity markets for more than two years, deal counts and deal values have improved and the capital markets have reopened their doors to companies in the energy space.
  • Distressed asset demand is beginning to outstrip supply. With the a decrease in the number of bankrucptcies, the market has seen a record high level of dry powder for investment. 
  • Hydraulic fracturing makes a comeback. 2015 saw a tipping point in the use of hydraulic fracturing; today, more than 51% of new oil production results from wells that are fracked. 
  • The appetite for cost savings in recent years has influenced operators' taste in frac sand. The affordability of Regional sand outweighs the concurrent efficiency losses of the inferior product. 
  • Regional sourcing of proppants has risen. The continued depression in energy prices have significantly limited the profit margins of oilfield service operators demanding frac sand - squeezing margins at ever stage in sand transport.