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North America Nirvana for Oil Services ETFs


The oil services sector, along with exchange traded funds, could begin to pick up, with Halliburton (HAL) expecting a more bullish outlook in the oversupplied North American hydraulic fracturing market.

Dave Lesar, chief executive officer of Halliburton, believes the two-year glut in the so-called fracking equipment market is easing “much faster” than expected, reports David Wethe for Bloomberg.

“I’m starting to feel the momentum swing,” Lesar said in the article. “I am more excited about North America now than I have been since late 2011.”

Specifically, Lesar points to expanding operations in the oil-rich Permian Basin of Texas.

“The sentiment was more bullish,” Scott Gruber, an analyst at Sanford C. Bernstein & Co., said in the article. “They don’t talk about pricing, but you can kind of infer they’re getting bullish on pricing.”

According to Barclays Plc., producers are projected to raise capital spending in the U.S. and Canada by 7% this year after two-years of below 5% growth.

Investors interested in the services and equipment companies that cater toward the energy sector can take a look at broad options like the Market Vectors Oil Service ETF (OIH) and iShares U.S. Oil Equipment & Services ETF (IEZ) . Halliburton makes up a hefty 11.9% in OIH and 10.4% of IEZ. Year-to-date, OIH has gained 6.3% and IEZE is up 7.8%. [Oil Services ETFs Soar Ahead of Earnings]

Alternatively, the SPDR Oil & Gas Equipment & Services ETF (XES) takes a more equal-weight approach, with a 2.3% weight in Halliburton. XES is up 5.8% year-to-date.

Additionally, th: PowerShares Dyanmic Oil and Gas Service ETF (PXJ) follows a fundamentally weighted index, which selects stocks based on price momentum, earnings momentum, quality, management action, and value. PXJ is up 7.1% year-to-date. Halliburton is 5.1% of PXJ.

For more information on the energy sector, visit our energy category.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.