While the pressure has remained on West Texas Intermediate oil pricing with price of a barrel still below the psychological $50 level, there are indications that lags in data, combined with the OPEC production cuts continuing, may bode well for the second half of 2017. As expected, many non-OPEC members are suspected of not complying fully with the cuts, but big drops in the Saudi’s and other OPEC countries’ output should start to show up in the data.

A new Deutsche Bank research report makes the case that non-U.S. and non-OPEC production often surprises to the downside, and the analyst suspects that given the huge spending cuts, few of the major producing countries can lift production. Toss in the possibility of geopolitical issues having an impact, and prices may rise soon.

Deutsche Bank points out that at current levels only the land drillers enjoy any type of margin gains, and while those could deteriorate if prices continue to decline, they could sharply improve if prices jump. Four stocks are rated Buy at the firm.

Basic Energy Services

This recent initial public offering has come in sharply following big gains and could have serious upside potential. Basic Energy Services Inc. (NYSE: BAS) provides well site services to oil and natural gas drilling and producing companies in the United States.

Its Completion and Remedial Services segment offers pumping services, such as cementing, acidizing, fracturing, nitrogen and pressure testing; rental and fishing tools; coiled tubing; snubbing services; thru-tubing; cased-hole wireline services; and underbalanced drilling in low pressure and fluid sensitive reservoirs.

The company’s Fluid Services segment is involved in the transportation of fluids; production of salt water; sale and transportation of fresh and brine water; rental of portable fracturing and test tanks; recycling and treatment of wastewater; operation of fresh water and brine source wells, and non-hazardous wastewater disposal wells; and preparation, construction and maintenance of access roads, drilling locations and production facilities.

The Well Servicing segment provides services performed with a mobile well servicing rig and ancillary equipment, such as maintenance work, hoisting tools and equipment required by the operation, and plugging and abandonment services, as well as manufactures and sells workover rigs.

The Deutsche Bank price target for the stock is $40, but the Wall Street consensus target is much higher at $46.35. The shares closed Tuesday at $31.56.

Nabors Industries

This company also provides drilling and rig services. Nabors Industries Ltd. (NYSE: NBR) offers rig instrumentation, optimization software and directional drilling services. It also provides completion, life-of-well maintenance and plugging and abandonment of a well.

In addition, the company markets approximately 466 land drilling rigs for oil and gas land-based drilling operations in the United States, Canada and approximately 20 other countries worldwide; approximately 445 rigs for land well-servicing and workover services in the United States; 98 rigs for land well-servicing and workover services in Canada; 42 rigs for offshore drilling operations in the United States and internationally; and seven jackup units and components of trucks and fluid hauling vehicles.

Top Wall Street analysts have stated that they think concerns over the company’s balance sheet are way overblown, and at current levels the shares are pricing in too modest of an industry recovery. In addition, the international exposure the company has helps to provide more stability.

Nabors investors receive a 1.67% dividend. Deutsche Bank has a $20 price target. The consensus price objective is $19.24, and shares closed Tuesday at $12.49.

Patterson-UTI Energy

This company could see meaningful business coming from Canada this year. Patterson-UTI Energy Inc. (NASDAQ: PTEN) subsidiaries provide onshore contract drilling and pressure pumping services to exploration and production companies in North America.

Patterson-UTI Drilling Company and its subsidiaries operate land-based drilling rigs in oil and natural gas producing regions of the continental United States and western Canada. Universal Pressure Pumping and Universal Well Services provide pressure pumping services primarily in Texas and the Appalachian region.

The company has set April 20 as the date for shareholders to vote on its nearly $2 billion acquisition of Oklahoma City-based Seventy Seven Energy. Patterson-UTI announced plans in December to buy Seventy Seven in an all-stock deal valued around $1.76 billion including debt.

The $31 Deutsche Bank price target is in line with the consensus target of $30.48. Shares closed at $23.45.

Precision Drilling

This is Canada’s leading oilfield services firm that provides contract drilling, well servicing and strategic support services to its customers. Precision Drilling Corp. (NYSE: PDS) provides customers with access to an extensive fleet of contract drilling rigs, directional drilling services, well service and snubbing rigs, coil tubing services, camps, rental equipment and water treatment units backed by a comprehensive mix of technical support services and skilled, experienced personnel.

Despite the company’s large Canadian exposure, 54% of its U.S. drilling fleet is located in the Permian Basin, which remains the hottest shale area in the United States. This stock may be a top pick for aggressive accounts looking for low-priced stocks to gain more shares.

The Deutsche Bank price objective is $10, and the consensus target is $6.80. The stock closed Tuesday at $4.51.

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While the spot price of oil may remain volatile, buying the top land drillers with exposure in the best basin plays in the United States makes good sense for aggressive growth investors. Should oil turn higher this summer and the rest of 2017, the gains could be substantial.

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