High Yield Energy: Energy Services & Refining Model Book Update

Research evidence excerpt

High Yield Energy: Energy Services & Refining Model Book Update

J P M O R G A N North America Credit Research

21 July 2026

High Yield Energy

Energy Services & Refining Model Book Update

• I have seen worse sights than this. The L48 outlook remains favorable into North America Corporate Credit -

2H26 thanks to an improving demand backdrop and relatively tight supply Energy (HY)

conditions. L48 drilling margin expansion opportunities should begin to Aaron Rosenthal, CFA AC

materialize with dayrates trending back to the mid-$30k/d range in (1-212) 270-4584

2H26/1H27. We view conflict-related headwinds embedded within 2Q results aaron.rosenthal@jpmorgan.com

as mostly transitory and the impact on profitability is expected to fade as Tarek Hamid AC

activity beings to normalize. LatAm utilization prospects (on and offshore) (1-212) 834-5468

bolster the medium term international outlook and the deepwater market is tarek.x.hamid@jpmorgan.com

expected to further tighten with improvements on both side of the supply/ Elle Boyd

(1-212) 270-7283

demand ledger. Meanwhile, the products side of the oil market remains tight elle.boyd@jpmchase.com

and Refiners are set to realize at or near record margins with crack spreads at

Nevin Mathew

all-time highs. Refiner and OFS balance sheets are in solid shape following (1-212) 834-5714

refinancing efforts in 2025 and 1H26. We are upgrading Services to nevin.mathew@jpmchase.com

Overweight but remain Neutral on the Refiners given tight existing trading J.P. Morgan Securities LLC

levels. Please find within our updated company-specific thoughts and ratings

for CVI, NBR, PBFENE, PDCN, RIG, VAL, and WFRD.

• Each man delights in the work that suits him best. The demand backdrop

for deepwater and international service providers appears robust. Rystad