While most eyes on Wall Street have been focused on technology and the banks over the past year, one sector that has snoozed was energy, and especially oil services. When oil plummeted, the first thing many exploration and production companies did was cut their capital expenditures. That in turn led oilfield services companies, and especially the land drillers, to park some of their fleet on the sidelines.

With West Texas Intermediate crude back over the $56 a barrel level and Brent crude well over $60, the scenario for the land driller in the United States is significantly brighter. A new Jefferies research report make the case that four top companies are in an excellent position. The report noted:

The argument that the U.S. onshore rig count can recover recent declines relatively quickly in 2018 has strengthened through earnings season, in our view, given (1) commentary from the contract drillers, (2) permitting trends, (3) that the recent pullback has been concentrated in privates (which is not unusual seasonally), (4) continued modest declines in drilling efficiency in the third quarter tod 2017 and (5) higher oil price.

Jefferies’ outstanding oil services and equipment analyst Brad Handler has five oilfield services top stocks for investors to consider. All have solid upside potential, but it should be noted that three of the companies are probably better suited for aggressive accounts with a higher risk tolerance.

Helmerich & Payne

This large cap sector leader is the safest and most conservative play for investors and is rated Hold at Jefferies. Helmerich & Payne Inc. (NYSE: HP) is the largest U.S. land driller and provides onshore drilling services primarily in the United States. It also offers land rigs internationally, as well as offshore platform rigs in the Gulf of Mexico.

The company provides drilling rigs, equipment, personnel and camps on a contract basis to explore for and develop oil and gas from onshore areas and fixed platforms, tension-leg platforms, and spars in offshore areas. Its contract drilling business operates through three reportable segments: U.S. Land, Offshore and International Land.

Many top Wall Street analysts feel that the company is one of the best positioned for the U.S. land recovery, and they also cite the strong balance sheet and the sector leading dividend.

Shareholders receive a 4.82% dividend. The Jefferies price target for the stock is $50, and the Wall Street consensus target is $49.96. Shares traded Monday well above both levels at $57.95.

Nabors Industries

Shares of this drilling and rig services provider were recently upgraded to Buy at Jefferies. Nabors Industries Ltd (NYSE: NBR) owns and operates the largest land-based drilling rig fleet in the world, and it is a leading provider of offshore platform workover and drilling rigs in the United States and select international markets. Revenues in 2016 were $2.23 billion.

Nabors markets approximately 400 rigs for land-based drilling operations in the United States, Canada and approximately 20 other countries worldwide, as well as 41 rigs for offshore drilling operations in the United States and internationally. The stock has been crushed this year, and Jefferies said this:

Nabors is down 62% year-to-date which reflects investor focus on its balance sheet and ability to generate free cash flow and pay down debt, in our view. This concern has been exacerbated recently by a softer-than-expected earnings report and focus on 2018 non-cash deferred revenues. While we acknowledging there is no quick fix to company’s balance sheet, we note that macro industry environment has gotten more favorable and a large part of the NAM Land newbuild/upgrade capex is now behind it.

Investors receive a 3.75% dividend, which may be lowered. Jefferies has a $9 price target, and the consensus price objective is $8.85. Shares traded Monday morning at $6.15.

Patterson-UTI Energy

This company could see meaningful business coming from Canada this year. Patterson-UTI Energy Inc. (NASDAQ: PTEN) is the second largest land driller in North America and a large pressure pumping provider. Its operations are particularly focused in the Marcellus and in Texas.

Patterson-UTI 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. For three months ended September 30, 2017, the company had an average of 161 drilling rigs operating.

The analysts noted:

Patterson-UTI remains the fifth largest Pressure Pumper with a 1.5million HHP frac fleet (currently 83% utilized) with exposure to ancillary rental equipment business through Great Plains Oilfield Rental. Its recent acquisition of MS Energy (directional drilling) complements its contract drilling business and provides attractive growth opportunities.

Investors receive just a 0.4% dividend. The $25 Jefferies price objective compares with the consensus figure of $24.63. The shares were last seen at $20.65.

Precision Drilling

Canada’s leading oilfield services firm 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 analysts had this to say:

Precision Drilling remains largely a balance sheet deleveraging “ story ” and the fact that it lowered 2017 estimated Capex by Canadian $34 million and reaffirmed its goal to reduce net debt by Canadian $300- $500 million over the next 3-4 years (we believe this is achievable) is more reassuring to investors and allows for more value accruing to equity holders over the longer term. We have also been impressed by the success of its efforts to reduce rig level operating expense in The U.S., which is manifest as higher activity allows for better fixed cost absorption.

Jefferies has set its price objective at $4.50. The consensus target price is $4.31, and shares traded at $3.15.

Pioneer Energy Services

This small cap company that could be a huge home run for investors, and it also could be a takeover target. Pioneer Energy Services Corp. (NYSE: PES) provides land-based drilling services and production services to a group of independent oil and gas exploration and production companies in the United States and internationally.

The company’s drilling services segment provides contract land drilling services to a group of exploration and production companies through its four drilling divisions in the United States and =in Colombia. Its production services segment provides a range of services to a group of exploration and production companies, with its operations concentrated in the various United States onshore oil and gas producing regions in the Mid-Continent and Rocky Mountain states and in the Gulf Coast. It provides its coiled tubing and wireline services offshore in the Gulf of Mexico as well.

The company recently reported that it has paid off the $101.7 million balance and retired the company’s $150 million revolving credit facility. Pioneer used a new $175 million senior-secured term loan and a new $75 million senior-secured revolving asset-based lending facility to pay off its previous debt. The senior-secured term loan is set to mature in November 2022. The analysts like the debt restructuring and noted this:

Pioneers U.S. drilling fleet of 16 rigs is fully utilized and with rates over $24,000 per day is realizing over $9000 a day of operating margin. The company is also marketing 80 of its 119 wireline units while the much smaller coiled tubing business has 14 units marketing and has strong utilization in the third quarter of this year.

The Jefferies price target is $3. The consensus target is $2.81, and shares were trading at $2.20.

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While the two larger cap companies are solid picks for growth accounts, the others are very aggressive plays and may not be suitable for conservative accounts. However, they all have a good forward trajectory, and the stocks trading in the single digits could very well be takeover targets for larger oil services companies looking to add to internal organic growth.

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