There are some green shoots emerging on the industry consolidation front. The Market Vectors Oil Service ETF (NYSEArca: OIH) has been climbing this week thanks in part to news that Schlumberger (NYSE: SLB) said it will acquire rival Cameron International (NYSE: CAM) for $12.7 billion.
Additionally, some Wall Street analysts see Cameron rivals such as FMC Technologies, Inc. (NYSE: FTI), Aker Solutions, Forum Energy Technologies, Inc. (NYSE: FET) and Dril-Quip, Inc. (NYSE: DRQ) as potential takeover targets. National Oilwell Varco (NYSE: NOV) and Weatherford International plc (NYSE: WFT) could also be targets.
Investors should keep in mind that the oil services sector is heavily reliant on capital spending cycles in the energy industry. The recent sharp cuts in capital expenditure budgets in 2015 contributed to the pullback in oil services – U.S. companies are expected to spend about 20% less than the average over 2014, with some cutting expenditures by around 50%. [Problems for Energy ETFs]
Energy Select Sector SPDR
