Battered Caretakers of the Oil Patch are Ready to Rise Again, If Only Oil Would Do the Same

Energy Associated Press

While Americans have cheered tumbling prices at the pump, the companies that work the fields that draw the oil that eventually becomes gasoline have been caught in a vicious price squeeze.

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After thousands of job and cost cuts, however, there are signs that oilfield service companies may have weathered the worst of the storm even as major oil companies continue to pare back spending.

Halliburton Co. on Monday reported better-than-expected quarterly results after some hurtful cuts to offset a 60 percent plunge in oil prices from last June to January. Its rival, Schlumberger Ltd., which has cut even more jobs, also surprised Wall Street last week.

That is giving a boost to the entire sector. Stock prices that had fallen as much as 60 percent over the past year are bouncing back. In the last month, shares of Schlumberger, Halliburton, Baker Hughes Inc. and others are up more than 10 percent.

Halliburton and Baker Hughes both rose almost 3 percent Monday.

Still, energy experts don't expect a bottoming out in oil prices for at least several more quarters and the North American oil patch will remain a tough place to do business for the immediate future.

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"Visibility to the ultimate depth and length of this cycle remains uncertain," said Halliburton chairman and CEO, Dave Lesar in a printed statement Monday.

The depth of the cycle is ultimately what concerns much of the market, as companies continue to do what they can to stabilize themselves until oil prices stabilize.

Oilfield service companies are usually the first to exhibit symptoms of a down cycle in energy, as big oil producers demand concessions and better contracts.

That pressure is ongoing, though industry watchers say that such companies have become very lean and are in a good position now to take advantage of any rebound.

Investors will some additional chances this week to gauge the industry's health, with Baker Hughes Inc. reporting financial results on Tuesday and Weatherford International Plc. reporting on Wednesday.