Oil Field Service Survey Says...The Tide (Had) Turned

Research evidence excerpt

Oil Field Service Survey Says...The Tide (Had) Turned

Barclays | Oil Field Service

For Baker Hughes, the activity index maps to a 7% sequential increase to $989mn

compared to the Bloomberg consensus of $911mn and a 2% decrease sequentially. However,

BKR's overall performance will be highly dependent on other business functions, given its mix.

For SLB, the Bloomberg consensus of $2,174mn (flat sequentially) appears lower than the

model implied 9% increase to $2,354mn. We place less weight on this result, however, as

SLB's large international exposure and relative lack of shorter-cycle businesses reduce its

sensitivity to North American activity trends and weaken the relationship with the Dallas Fed

survey.

Overall, the Dallas Fed survey points to a stronger 2Q26 revenue backdrop for OFS companies

than is currently reflected in Bloomberg consensus estimates. As a cautionary note, industry

sentiment has clearly improved from the trough levels over the past two years, but we

believe the latest activity index may somewhat overstate current conditions. The survey

was conducted during a period of elevated oil prices and geopolitical uncertainty, before the

U.S.-Iran MoU was fully finalized and sentiment began to shift.

While higher oil prices generally support drilling activity, the relationship is not linear, and

today's oil price environment in the high-$60s/bbl range is materially less supportive than the

roughly $90/bbl backdrop that prevailed during the survey period. As a result, we view the

survey as directionally constructive for OFS 2Q26 earnings, but potentially reflective of

peak-quarter sentiment rather than current (ie, 3Q26) market conditions. Particularly for

rig companies where the revenue-activity index sensitivity is best expressed on a lagged basis,