What Happened?
A number of stocks fell in the morning session after WTI crude oil plunged on Iran-US peace deal progress and renewed hopes for reopening the Strait of Hormuz.
Oilfield services companies (Schlumberger (SLB), Halliburton (HAL), Baker Hughes (BKR), TechnipFMC, and the offshore drillers) get paid only when oil producers spend money drilling new wells.
When oil prices drop sharply, producers slash their capex budgets within weeks, which directly cuts the revenue these service companies see in the next two to three quarters. Imagine a Permian shale producer that built its 2026 drilling budget assuming $100 oil. When oil drops to $93 in a single session, the math on the next 50 wells suddenly looks much thinner: fewer barrels make economic sense to extract. Producers respond by deferring or cancelling rig contracts, sand orders, hydraulic fracturing services, and completion equipment. That's exactly what oilfield services sell.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Oilfield Services company RPC (NYSE: RES) fell 3.6%. Is now the time to buy RPC? Access our full analysis report here, it’s free.
- Oilfield Services company Transocean (NYSE: RIG) fell 3.3%. Is now the time to buy Transocean? Access our full analysis report here, it’s free.
- Oilfield Services company Valaris (NYSE: VAL) fell 3.4%. Is now the time to buy Valaris? Access our full analysis report here, it’s free.
Zooming In On RPC (RES)
RPC’s shares are quite volatile and have had 19 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 20 days ago when the stock dropped 4.9% on the news that it reported first-quarter results that showed declining profitability, sparking investor concern despite a revenue beat.
Although RPC's revenue of $454.8 million surpassed analyst estimates and its adjusted earnings per share of $0.03 met expectations, other key figures pointed to weakening financial health. The company's adjusted EBITDA margin, a measure of operating profitability, contracted to 11.8%, down 2.9 percentage points from the same quarter last year, indicating that expenses grew faster than revenue.
Additionally, the company's gross profit margin fell by 4.9 percentage points year-on-year. Adding to the concerns, free cash flow was negative $932,000, a significant reversal from a positive $7.6 million in the same period a year earlier. These declines in profitability overshadowed the strong sales figures, signaling to investors that the company is facing margin pressures.
RPC is up 24.1% since the beginning of the year, but at $6.87 per share, it is still trading 14.2% below its 52-week high of $8 from April 2026. Investors who bought $1,000 worth of RPC’s shares 5 years ago would now be looking at an investment worth $1,376.
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