UBS has published a selection of top picks within the oil and gas emerging opportunities segment, singling out companies that the bank expects could gain from shifts in the energy value chain - notably digital offerings, incremental power-generation demand and localized activity rebounds.
How UBS framed the opportunity
The firm’s review concentrates on firms that possess identifiable growth catalysts and operational advantages that could support performance as the energy landscape evolves. UBS highlighted digital service adoption, demand for power-generation equipment and improving activity in certain regions as the principal themes underpinning its selections.
1. SLB (NYSE:SLB)
UBS pointed to several drivers it sees underpinning SLB’s prospects: execution of the company’s Digital growth strategy, integration of CHX, expanding AI hardware demand, and the return of activity in Saudi Arabia. UBS continues to view SLB’s newly formed Digital unit as a potential catalyst for a re-rating of the stock.
Recent commercial developments cited by UBS include a three-year agreement with Azule Energy to extend use of the Delfi digital platform and a contract won via the OneSubsea joint venture to supply a high-pressure boosting system in the Gulf of America.
2. Liberty Energy (NYSE:LBRT)
UBS’s commentary on Liberty Energy stresses the role of power-generation demand for the company’s outlook, while noting a potential constraint that could act as a counterweight: longer lead times across the supply chain for key gas power plant equipment. Specifically, lead times have extended for combined-cycle gas turbines (CCGT), transformers and switching gear.
UBS sees the supply-chain backdrop as supportive of its favorable view on LBRT because Liberty’s capacity of reciprocating engines is projected to expand by approximately 1 GW by year-end 2027, with the majority of that incremental capacity already ordered through existing original equipment manufacturer relationships. The firm’s profile has also been affected by outside analyst activity: BofA Securities upgraded Liberty Energy from Neutral to Buy. Separately, Liberty announced the pricing of a $475 million convertible senior notes offering.
3. National Energy Services Reunited Corp (NASDAQ:NESR)
NESR completes UBS’s trio of highlighted names. In its most recent reported period, National Energy Services Reunited posted fourth-quarter revenue of $398.3 million, representing a 15.9% year-over-year increase. The company also disclosed it had secured multi-year cementing contracts with an aggregate value of roughly $300 million.
Bottom line
UBS’s list emphasizes companies exposed to digital transformation in oilfield services, growth tied to power-generation equipment demand and firms with material contract activity or order books. The bank’s selections rest on a combination of strategic initiatives, contract wins and capacity build-outs that it deems relevant as the sector adapts.