Energy fundamentals have improved dramatically over the past two years, and the industry is showing renewed vigor and momentum for a long-term recovery, according to a Raymond James energy analyst.

J. Marshall Adkins, who attended the recent Offshore Technology Conference in Houston, noted in an energy “Stat of the Week” that his several days at the conference showed evidence that companies are gearing up with personnel and the technology for a recovery.

Most of the showcase technologies related to evolutionary, not revolutionary, improvements in expandable tubulars, real-time drilling and production information, Adkins noted. He also found “safer and faster” tools, underbalanced drilling and smaller rig footprint designs.

However, “investors should realize that the oilpatch is notoriously slow at adopting new technologies. While advancing technologies will drive superior long-term performance, most of the new technologies highlighted…will have little meaningful earnings impact on our companies over the next year.”

Still, Adkins found that the large turnout — more than 50,000 — and the “positive mentality” at the conference “will send a signal that most in the oilpatch believe we are poised for a continued recovery in activity.”

Historically, the Raymond James analyst noted that OTC attendance has tracked fairly closely with the price of oil, a correlation he said was “remarkably good” for nearly 30 years. And, the oilpatch has “bounced back from its most recent slump.” Said Adkins, “maybe an even more telling statistic is that the number of exhibiting companies (almost 2,000)…remained at the highest level since 1983.”

While the number of exhibiting companies was up significantly, he found evidence that “consolidation among the service companies has clearly reduced the number of medium-sized, technology-oriented oil service companies.” Also, “as the industry completes a growing number of deepwater, subsea wells, maintenance looks to be a growing issue.”

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