Energy investors have been on one of the biggest roller-coaster rides over the last three years, and it looks as though they may have to stay on for the foreseeable future. With OPEC countries’ compliance to production cuts waning, and shale producers in the U.S. still going all out, the oversupply issue remains front and center. The good thing for investors is the lower price deck for oil in 2017 and 2018 is now being priced in.

Another bright area for domestic producers is the potential for oil and liquid natural gas exports to ramp up dramatically over the next few years. In a new research report from RBC, they note that Wall Street now sees the writing on the wall, and they said this in their report.

Oilfield services stocks are now pricing in a 19% reduction to Wall Street EBITDA estimates in the U.S. and 23% in Canada. Of note, U.S. frac sand and land drilling stocks imply 53% and 35% estimate reductions, respectively.

The best route for investors looking to take advantage of the selling in the sector may be to stay with large-cap diversified leaders, and wait for smaller more aggressive plays when the sector trend looks better. RBC has four stocks rated Outperform.

Baker Hughes, a GE Company

The merger of the Baker Hughes and General Electric Company (NYSE: GE) received final approval, and this is the new entity. Baker Hughes, a GE Company (NYSE: BHGE), is a provider of integrated oilfield products, services and digital solutions. The company’s products and services include upstream, midstream, downstream, industrial and digital.

The company’s upstream includes evaluation, drilling, completions and production. Midstream enables the power and compression efficiency for LNG and pipeline and storage. Downstream builds reliability and safety into process operations that includes refining and petrochemical and fertilizer solutions.

The company’s industrial solutions offer power generation to advanced control systems and sensing technology that boost industrial facilities. Digital transformation integrates data on an open platform with security and scale. Baker Hughes’ digital transformation enables field services with real-time insights.

At least so far, analysts seem to like the combination of the two sector leaders and have a healthy $54.50 price objective. The Wall Street consensus price target is set at $57.41. The shares closed Monday at $37.64. The implied return is almost 50%.

Halliburton

This company is still down almost 25% from highs printed for this year in January. Halliburton Company (NYSE: HAL) is one of the world’s largest providers of products and services to the energy industry. The company serves the upstream oil and gas industry throughout the life cycle of the reservoir – from locating hydrocarbons and managing geological data, to drilling and formation evaluation, well construction and completion, and optimizing production through the life of the field.

Halliburton is the second-largest provider of oil services and the number one pressure-pumping services provider worldwide. For investors looking for an oil-field services company to add, this is arguably the best, and top analysts believe they will benefit as the frac market has tightened significantly, and prices are 20% to 30% off the lows.

Halliburton shareholders are paid a 1.63% dividend. The RBC price target is $65. The consensus is lower at $58.03. The shares closed Monday at $44.11. Hitting the price target would be almost a 50% gain for investors.

Schlumberger

This top oil services company is a solid large cap pick for more conservative accounts. Schlumberger Limited (NYSE: SLB) is a supplier of technology, integrated project management and information solutions to the international oil and gas exploration and production industry.

The company operates in the oilfield service markets through three groups: reservoir characterization, drilling, and production. The reservoir characterization group consists of the principal technologies involved in finding and defining hydrocarbon resources. These include WesternGeco, Wireline, Testing Services, and Schlumberger Information Solutions.

Schlumberger is the world’s largest provider of services and equipment used in drilling, evaluation, completion, production, and maintenance of oil and natural gas wells. Revenues in 2016 totaled $27.8 billion and the company posted EBITDA of a massive $6.5 billion.

Shareholders are paid a solid 3% dividend. The RBC price objective is $103, while the consensus is set lower at $87.92. The stock ended the day Wednesday at $66.83. The implied return is 57%.

Weatherford

This company has been demolished from its 2014 highs, but may be offering aggressive investors big upside potential. Weatherford International Ltd. (NYSE: WFT) is one of the largest multinational oilfield service companies providing innovative solutions, technology, and services to the oil and gas industry. The company operates in more than 100 countries and has a network of about 1,200 locations, including manufacturing, service, research and development, and training facilities. It employs approximately 37,000 people.

Weatherford offers customers a wide range of global capabilities, including a proprietary system for pressure management in the mushrooming arena of subsea production. The changes in government oil policy in recent years in Mexico may also provide some favorable tailwinds for the company, despite the downturn in oil pricing.

Earlier this year, the company named Mark McCollum as its chief executive officer, luring him from his role as Halliburton’s chief financial officer. One of the new initiatives from the top is a joint venture formed with Schlumberger, which will own 70% and be the operator of the hydraulic fracturing partnership, to be known as OneStim. Weatherford will own 30% of the venture and receive a one-time cash payment of $535 million.

The RBC price target is set at $8 and the consensus for shares is set at $6.56. The stock closed trading on Monday at $4.29. The implied return to the price target is a whopping 91%.

Clearly this is a value play for investors, especially buying shares in front of what is expected to be declining earnings. The top companies have fought through oil price swings before, and should work their way through the current $40-to-$50 price range and come out in good shape.

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