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Investing.com -- Europe’s oilfield services sector (OFS) offers better opportunities than exploration and production (E&P) companies as the industry faces a weaker commodity backdrop and slowing upstream investment, according to JPMorgan.
Analysts argue that offshore, liquified natural gas (LNG) and Middle East spending are more resilient, while E&Ps remain more directly exposed to pressure from lower oil prices.
“Geopolitical cross currents have driven heightened oil price volatility in 2025,” analysts led by Alejandra Magana wrote, noting that OPEC+ supply increases are pushing the market toward a projected oversupply of 2.5 million barrels per day by the fourth quarter of this year.
Brent is expected to average $58 a barrel in 2026, with global upstream capex set for its first decline since 2019.
Within this environment, the bank favors oilfield services stocks that combine high revenue visibility, strong balance sheets, and exposure to advantaged regions and themes.
Saipem (BIT:SPMI) is the bank’s top pick, with JPMorgan highlighting its strong backlog in Africa and the Middle East, margin recovery potential, and added pricing power from its pending merger with Subsea 7.
“The stock’s multiple has been hindered by legacy execution issues set to move further in the rearview mirror, which creates an attractive entry opportunity given it currently trades <3x EV/EBITDA,” the analysts said.
Technip Energies (EPA:TE) is also rated Overweight, with the bank pointing to its leading position in LNG engineering and construction, where a wave of final investment decisions continues to provide visibility.
The company’s shift toward higher-margin technology and product solutions is expected to support further gains.
Among E&Ps, Harbour Energy (LON:HBR) is JPMorgan’s preferred name. The analysts cite its scale-driven cost reductions, solid free cash flow outlook for 2026, and potential for another buyback program alongside its dividend.
They note Harbour remains undervalued, still trading below pre-windfall tax levels despite improved diversification.
By contrast, Aker Solutions (OL:AKSOA) is rated Underweight, with JPMorgan flagging risks from fewer large Norwegian projects, limited margin improvement, and looming cash flow headwinds as major contracts roll off.
Overall, JPMorgan sees the market shifting from a “rising tide” phase to one where stock selection is critical. Companies best positioned with backlog strength, margin upside, and resilient exposures are likely to emerge as winners in Europe’s shifting commodity landscape.