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The economic environment is expected to be poor for the oilfield services and equipment industry in 1999, although earnings remained good through most of 1998, as drilling activity has slowed. However, many oil companies have turned to offshore drilling due to declining reserves and the multiyear contracts that occur in this sector will help the industry maintain cash flow. These stocks are not timely in 1999 and have appeal mainly for long-term investors.

Demand for oil and gas services, as well as for drilling rigs in land and shallow water areas, has decreased in 1998 in response to the lessened activity in worldwide drilling activity. However, drilling activity in deepwater areas has remained relatively steady as major oil producers with declining reserves have turned to these areas, and companies which provide services here have remained viable. These stocks are not timely in 1998, but several have potential for the future.

Oilfield service industry firms have proliferated during the 1980s, and, as a result, many companies have struggled to survive during the 1990s. The industry is undergoing consolidation, and the surviving firms are lean and strong. New technology, such as direction drilling, subsea completions, coiled tubing and 3D seismic, are given an added boost to operations. Investors will find opportunities within the industry, but safety rankings are important to observe.

Oilfield services and equipment stocks look more favorable as longer term investments out to 1997-1999 than as short term investments, as few of the stocks are timely. The business has been hurt by overcapacity, and many companies are choosing to consolidate their operations or outsource some of their functions. Global Marine and Production Operators are two companies that have picked up extra business as a result of the outsourcing trend.

The oilfield services and equipment industry should experience a slowing of business that will not improve until 1995. Investments over the log term may prove to be fruitful, partly because technology has helped lower costs associated with development and exploration. Additionally, demand for oilfield equipment may exceed demand as early as 1997. Spending for oilfield services may fall 5% in 1994.

The oilfield services/equipment industry is not expected to perform well during 1994, due to a cut in oil prices and the rising demand for gas. Industry firms are finding ways to cut expenses, by contracting with offshore drillers for turnkey services, such as compression services. International opportunities exist for oilfield services firms, and Vietnam has joined the international marketplace. The long-term outlook for this industry is good.

Oilfield services and equipment stock prices rose in 1993 but these stocks are still generally best for long-term investment consideration. The market for oilfield services/equipment is expanding. A number of factors have contributed to this growth. More wells are under construction as natural gas becomes increasingly popular. In addition, passage of NAFTA should aid the industry as Mexico pushes to increase its natural gas production. Finally, as aging drill equipment and vessels atrophy, demand for oilfield equipment has increased.