UBS, the global investment bank, has spotlighted promising companies within the oil and gas sector, particularly those poised to capitalize on digital transformation trends, increasing demand for power generation, and regional economic improvements. The focus of UBS’s analysis rests on firms that exhibit specific growth catalysts and operational advantages, crucial for thriving in the shifting energy landscape.
One of the standout companies identified is SLB, which UBS believes is well-positioned to harness the potential of digital growth. The firm’s ongoing integration of its Digital unit and the resurgence of activities in Saudi Arabia are seen as substantial drivers for future stock performance. Recently, SLB secured a significant three-year agreement with Azule Energy to enhance the utilization of its Delfi digital platform. Additionally, SLB’s joint venture, OneSubsea, won a crucial contract to provide a high-pressure boosting system in the Gulf of America, reinforcing UBS’s positive outlook for SLB’s stock re-rating.
The investment bank also brings attention to Liberty Energy (LBRT) amidst concerns over potential challenges in the power generation sector, particularly related to supply chain bottlenecks affecting gas power plant equipment. As lead times extend for components such as gas turbines, transformers, and switching gears, UBS maintains a bullish perspective on LBRT, estimating a 1GW increase in the capacity of its reciprocating engines by the end of 2027. The majority of this capacity has already been secured through established relationships with original equipment manufacturers (OEMs). Recently, Liberty Energy received a rating upgrade from BofA Securities, moving from Neutral to Buy, and announced a $475 million offering of convertible senior notes.
Furthermore, National Energy Services Reunited Corp has emerged as a key player, boasting a fourth-quarter revenue of $398.3 million, reflecting a 15.9% year-over-year increase. The company has also secured multi-year cementing contracts valued at approximately $300 million, further cementing its position within the sector.
UBS’s analysis underscores the evolving dynamics of the oil and gas industry, emphasizing the importance of digital innovation and strategic partnerships in driving growth amidst changing market conditions.
