Barclays has raised its target prices for ten of the major players in the oil services industry. Barclays has based the new target prices on expectations that global E&P (exploration and production) spending will increase 6.1%, up from $682 billion in 2013 to an all-time high of $723 billion in 2014.
The biggest revision is in the price target for Halliburton (HAL), and Barclays now sees a 74.3% upside in the stock price.
The increase in E&P spending in the industry has been directly proportional to oil prices and production growth. This correlation has remained consistent over the past four years and is expected to continue in 2014, as the industry further shifts into the development stage, and operators take advantage of attractive ‘well economics’ and premium service technologies.