Andy Heilman
Principal Owner of MH & Associates
Halliburton, a high-quality oil service company the market discarded, is well positioned to benefit from rebuilding Venezuela's oil infrastructure, where it kept offices through the rough years, and from a coming deep-sea offshore boom. The chart shows a backtest after an inverse head-and-shoulders breakout and a bullish inside day, with the next target around $43. x.comÂ
Oilfield services such as SLB should benefit from capex for reconstruction and retrofitting, while refiners look too late to chase. Refining margins hit all-time highs as Chinese utilization fell and 40% of Russian capacity went offline, but refiners are over-earning and margins should compress. Making Venezuela's output meaningful would take significant capex across the supply chain and years, though producers risk repeating last cycle's capex blowup with December 2027 WTI at $70. x.com x.comÂ
Halliburton and SLB are the crown energy bets if the oil supply disruption persists or worsens: more oil must be found, and damaged sites will need more repairs. The oil supply chain is already hurt, and if the situation is not resolved within days, inflation will spike; longer disruptions, more combat or a ground invasion would also spread fear. The energy trade began months ago and its initial move is done, but it could give much more if the conflict continues. x.comÂ
Halliburton is priced for shrinking margins just as fracking capacity tightens. Revenue has been roughly flat since 2023 while operating margin fell from 17.7% to 13.1% and EPS from $3.13 to $2.37, so it trades at 15.3x expected earnings versus about 22x for SLB and Baker Hughes. Years of underinvestment have left less North American frac equipment, and management says its fracking schedule is fully booked. Each one-point margin gain adds about $0.20 of EPS. x.comÂ
Chevron already has producing Venezuelan ventures, but expanded agreements still need drilling, dependable power, crews and equipment before more barrels can be sold. Its three ventures were producing about 280,000 barrels a day at the July earnings call, and production had grown 15% year to date by September. Keep holding Chevron, but past gains do not justify buying more at any price. x.com x.com x.com x.comÂ
Crude oil prices are likely headed lower as a Venezuela deal covering 65 billion barrels and $100 billion, plus a new strait being dug on the Omani side, open up supply. That doesn't sink every oil stock: refiners and midstream services stand to benefit, and Halliburton could gain greatly from years of rehab work across 17 Venezuelan fields, where it already has a subsidiary and is reportedly in talks to supply equipment and services. x.comÂ
Money is rotating from big refiners and integrated oil companies into oil drilling and servicing firms. The move could be in its early innings, and the recent drilling gains alongside refiner losses are working in that direction. x.comÂ
Offshore-industry consolidation is a major tailwind for Transocean. Approval of its merger with Valaris should unlock upside over the next few quarters, with shares next running to $7 or higher. x.comÂ
Crude oil faces a strong bearish headwind from potential new supply, as the Trump administration is reportedly close to a deal for ownership stakes in Venezuelan oil fields that US officials estimate could more than double US reserves. A textbook double top on the daily chart has price rejecting resistance and accelerating lower. The downside target is the 200-day EMA, where a bounce could follow if institutional buyers defend it. x.comÂ
Oil prices should decline as a deal for Venezuelan oil fields, which hold the world's largest crude reserves at 17-18%, adds supply. Oil already fell 4% last week. x.comÂ
Transocean's new contract adds to its momentum even before the catalyst it is waiting on. It won a two-year deal with ONGC for its Dhirubhai Deepwater KG2 drillship, starting in Q1 2027 and worth about $300 million, and the stock has broken above $6. x.comÂ
