3 Oil Service Stocks to Ride Out the Global Energy Storm: Piper Sandler

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a day ago

In recent years, oil markets have been anything but stable. Geopolitical tensions – most notably the wars in Ukraine and the Middle East – have combined with shifting production strategies from the OPEC+ alliance to drive significant price swings. On top of that, Trump's tariff policies have thrown another wrench into global trade and pricing trends.
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All of this adds up to a mixed outlook for the oil industry, especially in the US. Taking the measure of the situation, and assessing how to invest in the segment, Piper Sandler analyst Derek Podhaizer writes, 'With the macro and oil prices still weighed down by a combination of tariffs and OPEC+ production hikes, we stay disciplined leaning into our oil price shock playbook and OFS Investment Prism to form our ideas.'
Having launched coverage of stocks spanning various segments across the North America, International, and Offshore markets, Podhaizer is making concrete recommendations on three oilfield services stocks to buy. According to the TipRanks database, all three of his picks have earned Strong Buy consensus ratings from the Street – and are showing solid upside potential. Let's give these stocks a closer look, and find out just what makes them compelling choices in today's energy industry environment.
National Energy Services Reunited (NESR)
We'll start with National Energy Services Reunited, an international oilfield services operator whose activities extend across North Africa and the Middle East and into India and the Indonesian archipelago. The company employs over 6,000 people, who provide 20 service lines working with more than 25 exploration and production (E&P) firms in 16 countries. National Energy Services' market cap of $579 million plants it solidly in the small-cap category.
National provides a long list of services, vital to the industry's ability to extract fuels from unconventional plays. These include filtration, hydraulic fracturing, nitrogen services, pumping, and well completions, as well as essential drilling services such as directional drilling, fishing tools, and testing services. In addition to these, National also provides tools and equipment needed to drill and maintain active rigs.
In short, National makes it possible for its customers and partners to initiate drilling activities, complete wells, and provide steady flows of hydrocarbon fuel production. By providing these specialized sets of engineering and technical skills, the company allows E&P firms to focus on their own essential activities, locating and tapping fresh oil and gas reservoirs.
National generated $1.3 billion in full-year revenue last year, for a year-over-year gain of nearly 14%. Nevertheless, shares in NESR are down significantly this year, with strong losses coming after the company released its 1Q25 results. The company missed expectations at both the top and bottom lines in the quarter, and its revenue was down sharply from 4Q24. The company attributed the slowdown to a lower work tempo in the Mid East during the Ramadan holiday month, as well as the general uncertainty in the global energy industry.
When we take a close look at the Q1 results, we see that National had a top line of $303.1 million, up 2% year-over-year and $5.2 million below the forecast. The company's 14-cent non-GAAP EPS missed expectations by 6 cents.
For Piper Sandler's Podhaizer, this company shows plenty of potential to generate gains in its core geographical area of operations. He writes, 'NESR is the only US listed pure-play Middle East service company, providing investors a way to gain exposure to growth regions across the Middle East, including Kuwait, unconventional Saudi Arabia, Oman, UAE, and Libya. NESR has positioned itself to be a platform to deploy US Shale technology across the Middle East… In combination with its Roya directional drilling platform, NESR is well positioned to scale unconventional activity in the Middle East, particularly the Jafurah basin in Saudi Arabia.'
Podhaizer goes on to put an Overweight (i.e., Buy) rating on this stock, along with an $11 price target that points toward a one-year upside of 83%. (To watch Podhaizer's track record, click here)
While there are only 3 recent analyst reviews on file for NESR, all are positive – giving the stock a unanimous Strong Buy consensus rating. The shares are priced at $6, and the $12 average target price implies an upside of 100% for the coming year. (See NESR stock forecast)
Select Water Solutions (WTTR)
The second of Piper Sandler's picks that we're looking at here is Select Water Solutions, which was previously known as Select Energy Services. The name change, effected two years ago, was made to reflect the company's true focus on providing sustainable water and chemical solutions in the energy industry.
The energy industry depends on water and impacts water in myriad ways. Drilling operations frequently penetrate water tables as they target hydrocarbon layers, and unconventional extraction methods rely on mixtures of water, sands, and chemicals to enhance hydrocarbon well production. Select's services revolve around water – the company supports critical water infrastructure assets, provides manufacturing and recycling capabilities for both water and chemicals, and makes technology available to promote sustainable water use, minimizing or preventing environmental damage through the full cycle of the target well.
Select can meet the full range of challenges affecting the energy industry's use of water and other essential chemicals. These include fluid analysis, production enhancement, operational efficiency, automated water balancing, water reuse, disposal systems, and efficiency issues in both transport and storage. The company's chemical technologies, including HYRC fluids, fluidmatch, and polymer chemistry, are designed to promote the safe and environmentally responsible admixture of needed chemicals into the hydrocarbon extraction processes.
Shares in WTTR have been sliding this year; the stock is down 27% for the year to date. The company has faced headwinds in the form of lower oil prices and tariff concerns, like much of the oil industry. But, in its last quarterly report, the company beat expectations at both the top and bottom lines.
Select's revenue came to $374.4 million, reflecting 2% year-over-year growth and beating the forecast by $13.6 million. On earnings, the company's non-GAAP EPS of 13 cents was 7 cents better than had been anticipated. The company burned cash during Q1, with its free cash flow reported as a negative $51.5 million.
In his coverage of this stock for Piper Sandler, analyst Podhaizer notes that water services, particularly infrastructure, is an expanding niche within oilfield services. He says of WTTR, 'A unique idiosyncratic catalyst for WTTR is the meaningful growth in Water Infrastructure, which comes with extended contract terms at elevated gross margins (>50%) providing for multi-year earnings visibility. Specifically for its most recent Water Infrastructure announcement in Colorado, which management described as an opportunity 'to put really high gross margin related revenue through the company with contracts that could be up to 50 years in length,' with escalators that 'juice' the returns over the life of the contract. Management expects to grow Water Infrastructure to 50% of gross profit by the end of 2025, up from 25% in 2023.'
Describing the outlook for the stock, and why it is positive for investors, the analyst adds, 'Given WTTR's earnings mix has been primarily Water Services and Chemical Technologies, two segments levered to the O&G cycle, valuation has been weighed down similar to its US Land peers. As Water Infrastructure becomes a larger part of the earnings mix, investors could shift their view more towards a SOTP approach with ARIS, TPL, and LB being the peer group.'
What this comes down to for Podhaizer is an Overweight (i.e., Buy) rating, which he complements with a $15 price target that suggests an upside of 58.5% on the one-year horizon.
WTTR is another stock with a unanimously positive analyst consensus, this one based on 4 recent reviews. The shares are currently trading for $9.46, and their $14 price target implies a share appreciation of 48% by this time next year. (See WTTR stock forecast)
Precision Drilling Corporation (PDS)
Last on our list is Precision Drilling. Precision, based out of Calgary in Canada's oil-rich province of Alberta, was founded in 1951 and is known for delivering high-performance drilling technology to the oil and gas industry. The company works onshore, and has 106 total rigs in operations, with a breakdown of 64 in Canada, 35 in the US, and 7 internationally. The company's international footprint includes operations in Kuwait and Saudi Arabia.
Precision gives its customers access to the latest technology and expertise in fields such as gas-liquids and heavy oil drilling, well completion and production, high-pressure and high-temperature drilling, and custom rig configurations. On that last, Precision can also offer custom rig manufacturing.
In North America, Precision offers a varied fleet of drilling rigs, capable of pad walking and mechanized pipe handling, and featuring hydraulically raised masts. The company supports its drilling operations from rig construction through repair and maintenance, and offers a resilient, efficient supply chain during operations.
While oil drilling is an old occupation – the first true oil well was drilled in 1859 – Precision brings modern technology to bear on it. The company can provide apps to optimize drilling processes, and data analytics to provide the right insights at the right times – and all of this is supported by automation technologies which provide digital control for well operations.
Like the other stocks on this list, Precision has seen its share price fall this year – the stock is down 16% year-to-date. Most of that price drop came during the first quarter, and the shares have been ticking upwards since bottoming out in early April.
In its 1Q25 report, Precision showed a top line of C$496 million, down 6% year-over-year. In US dollar terms, this came to $357.4 million, and missed the forecast by $3.8 million. The company's earnings came to C$2.20, equivalent to US$1.58. The US earnings figure was 7 cents less than had been expected.
Checking in one last time with the Piper Sandler view, we find Podhaizer writing of Precision's leading role in the Canadian oil patch. He says of the stock, 'PDS is the most active driller in Canada with 34% market share. Importantly, with improving fundamentals, including LNG Canada and TMX expansion, its Super Triple and Single rigs are near full utilization, which is expected to support further daily margin improvement. Its Super Triple fleet utilization in the Montney/LNG play currently sits at 90-95%. Despite a deflationary US Land market and soft outlook, PDS has greater relative exposure to the Haynesville, which is an expected area of growth with the buildout of LNG takeaway capacity… we expect PDS to experience greater torque compared to its peers with each additional rig that returns to work.'
These comments back up the analyst's Overweight (i.e., Buy) rating, while his $72 price target suggests that the stock will see a gain of 41% heading into next year.
There are 8 recent analyst reviews on record for this stock, and their breakdown of 6 Buys to 2 Holds gives the stock its Strong Buy consensus rating. The shares are currently priced at $51.15, and their $68.26 average price target points toward a one-year upside potential of 33.5%. (See PDS stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
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