- November 19, 2012, 5:53 P.M. ET
Oil & Gas Services, Drillers Poised for Big 2013 Upside, Dahlman Rose Says
Dahlman Rose is forecasting an 11% increase in North American exploration revenue next year, translating into higher profits for some smaller drillers and services companies with undervalued stocks in the face of “washed out” sentiment.
Analysts Doug Garber, James Crandell and Jonathan Hunter say exploration and production revenue should get a boost from the relative strength in natural gas prices, which have recovered to near $3.85 per million British thermal units. In the past, about half of E&P revenue has translated into E&P spending. Dahlman writes that rig utilization should increase to 85% by the end of 2013 from 77% currently, raising equipment prices in the second half of 2013 — especially for “liquids” projects.
“We expect North American E&P revenue to increase 11% ($32 billion) to $334 billion in 2013 driven by a 37% increase in North American natural gas revenue ($31 billion), a 2% increase in North American oil revenue ($4 billion), and an 8% decrease in US natural gas liquids revenue(-$2 billion).”