Insights

Why Shares in Oceaneering International Bounced Back This Week

What happened 
Shares in energy engineering services and subsea robotics company Oceaneering International (NYSE: OII) bounced back from a disappointing trading period with a near-7% increase in the week through Thursday morning, according to data provided by S&P Global Market Intelligence. 
The move reflects the volatility in the markets and, in particular, the ongoing debate in the oil services sector.
So what
On the one hand, a rising price of oil and tightness in supply created by sanctions on Russia supports increased oil exploration and production — good news for the oilfield services sector in general. 
Image source: Getty Images.

On the other hand, oil majors are reluctant invest enthusiastically due to fears over the long-term future of the oil industry as the economy transitions to clean energy. While that could lead to a gradual and sustainable ramp up in spending, it does restrict the cyclical immediate growth opportunities for oil services companies like Oceaneering. Indeed, management merely maintained its full-year guidance in its last earnings report, despite the rise in the price of oil through 2022.
There’s little doubt Oceaneering has good near-term prospects, but they might not be as strong as some investors are hoping. Moreover, there’s also a debate over long-term prospects, with some investors taking heart from the potential tightness in oil supply and the need for oil services spending, and others fearing the uncertainty of the clean energy transition. 
Now what
Investors would be best advised to ignore the noise around week-to-week stock price movements and sentiment shifts. Instead, it makes more sense to focus on whether you like the long-term outlook for spending on oil and gas exploration and production or not.
Lee Samaha has no position in any of the stocks mentioned. The Motley Fool recommends Oceaneering International. The Motley Fool has a disclosure policy. –

What happened 

Shares in energy engineering services and subsea robotics company Oceaneering International (NYSE: OII) bounced back from a disappointing trading period with a near-7% increase in the week through Thursday morning, according to data provided by S&P Global Market Intelligence

The move reflects the volatility in the markets and, in particular, the ongoing debate in the oil services sector.

So what

On the one hand, a rising price of oil and tightness in supply created by sanctions on Russia supports increased oil exploration and production — good news for the oilfield services sector in general. 

Image source: Getty Images.

On the other hand, oil majors are reluctant invest enthusiastically due to fears over the long-term future of the oil industry as the economy transitions to clean energy. While that could lead to a gradual and sustainable ramp up in spending, it does restrict the cyclical immediate growth opportunities for oil services companies like Oceaneering. Indeed, management merely maintained its full-year guidance in its last earnings report, despite the rise in the price of oil through 2022.

There’s little doubt Oceaneering has good near-term prospects, but they might not be as strong as some investors are hoping. Moreover, there’s also a debate over long-term prospects, with some investors taking heart from the potential tightness in oil supply and the need for oil services spending, and others fearing the uncertainty of the clean energy transition. 

Now what

Investors would be best advised to ignore the noise around week-to-week stock price movements and sentiment shifts. Instead, it makes more sense to focus on whether you like the long-term outlook for spending on oil and gas exploration and production or not.

Lee Samaha has no position in any of the stocks mentioned. The Motley Fool recommends Oceaneering International. The Motley Fool has a disclosure policy.

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