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Raymond James Energy Stat of the Week
by J. Marshall Adkins

Energy Stat: NAPE 2017 - All Signs Point to "Go" on Higher Service Pricing
February 21, 2017

The annual North American Prospects Expo (NAPE) took place in Houston this past week. It is one of the largest yearly gatherings of exploration and production (E&P) and oilfield service companies getting together to network, showcase deals, and, this year especially, go hug their commercial bankers. As is our tradition, we hosted our 15th annual NAPE dinner, which was attended by ~200 industry representatives; the vast majority of the attendees work for private E&Ps and private equity firms involved in the industry. Additional attendees were also represented from oil service and midstream.

For the second year in a row, this year's dinner was highlighted by real-time anonymous voting from the audience on debated industry topics. We highlight that the results do not represent a consensus view among equity markets, but are predominantly based on those seeing operating results firsthand within their own firms on a daily basis. In this week's ''Stat'' we will share both our and the insiders' views regarding the following questions facing the U.S. oil and gas industry today: 1) the outlook for just how much service pricing would increase in 2017; 2) the pace of well productivity gains in 2017 and whether this could offset rising service costs; 3) the 15-year U.S. production outlook; 4) how long the U.S. can keep drilling core inventory; and 5) what most believe are the best energy investment opportunities for 2017.

This is a summary of a much more detailed commentary. Please contact your financial advisor for the full report.

There is no assurance any of the trends mentioned will continue in the future. Past performance is not indicative of future results. Investing involves risk and investors may incur a profit or a loss. Specific sector investing can be subject to different and greater risks than more diversified investments. Investing in commodities is generally considered speculative because of the significant potential for investment loss. Commodities are volatile investments and should only form a small part of a diversified portfolio. Markets for commodities are likely to be volatile and there may be sharp price fluctuations even during periods when prices overall are rising.

The Dow Jones Industrial Average is an unmanaged index of 30 widely held stocks. The S&P 500 is an unmanaged index of 500 widely held stocks. The Oil Services Index (OSX) comprises 15 of the largest oil service companies. The S&P SuperComposite Oil and Gas Exploration & Production Index (S&P Oil and Gas E&P) consists of all oil and gas exploration and production stocks included in the S&P SuperComposite 1500 Index. Investors cannot invest directly in an index. Additional information is available upon request.