JPM OFS and Equipment: Weekly Insights & Analytics: Eyes on the Horizon: Previewing OFS Themes Ahead of 2Q26 Earnings

Research evidence excerpt

JPM OFS and Equipment: Weekly Insights & Analytics: Eyes on the Horizon: Previewing OFS Themes Ahead of 2Q26 Earnings

HP's profitability hinges on Saudi reactivation

cadence, with four of seven rigs spudded, and South America offsetting, while

BKR's improving UAE/Saudi trends should outweigh softer Brazil, U.S.

offshore, and Norway.

• Capital discipline is keeping the market structurally tight. Years of

underinvestment, equipment attrition, and prevailing capital discipline have

tightened supply, requiring little growth capex to sustain a firmer pricing

environment. PUMP and peers appear uninterested in massive growth capex,

which, absent reactivations, should keep the completions market relatively tight.

PUMP's binding constraint on reactivation is labor, not equipment, with 1-2

"ready"-stacked Tier II diesel fleets reactivatable below the usual $10-15mm

cost. PTEN's completions fleet is sold out with no white space in 3Q26 and July

1 pricing increases taking effect, with MSD dayrate increases implemented at

minimal cost inflation. HAL cites the evaporation of near-term white space and

a firming 2H26 frac calendar as central to its NAM profitability

recovery. NOV argues NAM underinvestment and equipment retirements have

left the market tighter than perceived, with its EPS segment troughing after three

straight years of NAM declines and capital-equipment backlog at a 2.5-year high,

and reinvestment already beginning as some OFS companies raise

capex. LBRT will not commit to incremental newbuilds (3-4 digiFrac units

flagged for 2026) without 1-1.5 years of visibility and a step-change in pricing

first. HP benefits from a tight super-spec rig market with high utilization enabling

accretive reactivations, and its performance-based contracting has reduced