HOUSTON (Reuters) – Even as crude prices hover near four-year highs, U.S. oilfield service firms’ third-quarter results due out in coming days will reflect a shaky recovery, as their customers face drilling constraints and pressure to hold down spending.
Oil producers are holding off finishing new wells, and cost pressures from tight labor markets and U.S. tariffs on imported steel are driving up service firms’ costs.
Meanwhile, shale producers including Devon Energy Corp (DVN.N) and Oasis Petroleum Inc (OAS.N) are doing more work traditionally handled by service companies.
The west Texas drillers that drove the shale revolution have overwhelmed the region’s infrastructure with oil production -driving up costs, depressing regional oil prices and slowing the pace of production growth.
“The risk for a number of (oilfield service) firms is to the downside,” said Brad Handler, a Jefferies equity analyst in New York who follows the oilfield service sector.
— Read on www.reuters.com/article/us-oilfield-results-preview/u-s-oil-service-firms-face-tough-quarter-despite-high-crude-prices-idUSKCN1MR0CH