Shale hydraulic fracturing companies could increase spending on exploration and production this year, supporting further gains in energy services-related exchange traded funds.
With improved oil prices, banks are more willing to extend credit lines to leveraged hydraulic fracturing or fracking companies that are looking to boost market share for the first time in two years, reports Swetha Gopinath for Reuters.
Deutsche Bank has a buy rating on Halliburton (NYSE: HAL), the second-largest oilfield services behind Schlumberger (NYSE: SLB). The two are the two largest holdings in OIH, combining for 34% of the ETF’s weight.
“For investors looking for an oilfield services company to add, this is arguably the best, and analysts feel it will be a huge benefactor as the frac market has tightened significantly and prices are 20% to 30% off the lows. Halliburton shareholders receive a 1.4% dividend. The Deutsche Bank price target for the stock is $66. The Wall Street consensus target is $64.26, and shares closed Wednesday at $51.54,” according to 24/7 Wall Street.
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