Global oil and gas production is going through a rough patch, majorly due to declining natural supply. Shares of NexTier Oilfield Solutions (NYSE: NEX), a wells completions service provider, witnessed volatility in momentum over a span of two days. NEX stock closed over 7% down yesterday since its previous close.
The Merger May Produce Largest Pressure Pumper in North America
Reuters reported that the company has announced a merger with Patterson UTI, a land drilling and pressure pumping service provider. The deal will lead to a new oilfield service provider worth $5.4 Billion. The move may produce the largest pressure pumper in North America considering the combined 3.3 Million hydraulic horsepower resulting from the collaboration.
The announcement noted the merger may help increase earnings per shares (EPS) and cash flow. Patterson UTI will own 55% of the shares while NexTier will take on the rest. Although the new entity may need to push harder to survive after the merger as reduced natural gas prices had a negative impact on drilling demand.
Leading oil production basin, the Permian, registered record high production with New Mexico leading the race. Data shows New Mexico produced 300,000 barrels per day (bpd) in 2022, accounting for half of increased U.S. oil production last year. The United States production was up by 600,000 bpd with New Mexico and Texas being the primary contributors.
NEX Stock Price Analysis
NEX stock price has remained quite volatile after its bull run came to an end in June 2022. It gained over 250% between January and June last year. Since then it has consolidated between $11.5 resistance level and $6.7 support. The company had a streak of 6 consecutive positive earnings till now.
Chop zone is indicating the price is in a strong bull trend currently. While average true range (ATR) is moving up showing declining volatility in the company shares. Moving average convergence divergence highlights rising buyer dominance, which might lead to additional gain in NEX stock price. Williams alligator too, is depicting a mouth open uptrend.
Oil production may suffer in a few regions including New Mexico, Texas and Oklahoma after high temperature alerts with Mexico recording record high temperatures. Additionally, the temperature is expected to rise in the coming days, while tepid production could lead to narrowing oil reserves.
Moreover, oil and gas companies are working their way to up their productivity. Shell Plc (LON: SHEL), a British multinational oil and gas organization, was planning to make an exit from Europe and boost production in China, citing ‘very robust’ demand. Reuters reported Chevron (NYSE: CVX), a petrol refineries company, will pour $500 Million in Argentina’s Trapial block.
