The Picks-and-Shovels Layer
Every barrel of oil and every unit of gas has to be pulled out of the ground by someone, and that someone is the oilfield services industry. These are the companies that drill the wells, complete them, and keep them producing, the picks-and-shovels layer of the energy economy. Baker Hughes (BKR), the stock behind Rob Spivey’s “The #1 Oil Income Play of 2026” pitch, is one of the three companies that dominate this business.
The industry breaks into three basic stages. Drilling is the physical work of boring the hole. Completion is the work of making that hole produce, fracking it, casing it, and installing the equipment that brings oil and gas to the surface. Production services then keep the well flowing for years, monitoring pressure, managing the reservoir, and maintaining the hardware.
How the Cycle Works
Oilfield services is a cyclical business in the purest sense. When oil prices are high, operators drill more, and services companies raise prices and expand. When prices fall, operators slash spending almost overnight, and services revenue follows down just as fast. The pain is amplified because services companies invest heavily in equipment and people during the good years, costs they cannot shed quickly when the cycle turns.
The years from 2015 to 2020 were a brutal version of that cycle. Prices collapsed, spending dried up, and the industry underinvested in new equipment and crews for the better part of a decade. That underinvestment is now the setup for the current recovery, as operators face the cost of maintaining and growing production with an aging, smaller equipment fleet.
Where Baker Hughes Fits
Baker Hughes is one of the Big Three alongside Schlumberger and Halliburton, and it brings a specific geographic profile to the table. Roughly three-quarters of its services business sits outside North America, which gives it exposure to international and offshore spending that its more North-America-focused peers do not share to the same degree.
The company’s orders jumped 29 percent in the second quarter of 2026, and management raised its revenue target to almost $7 billion, a sign that the recovery is showing up in the actual numbers. Our oilfield services companies article maps out how the Big Three compare against one another.
Services Versus Everything Else
One point worth separating is the difference between the services Baker Hughes sells and the equipment it also makes. The drilling, completion, and production work is the services business, tied closely to the commodity cycle. The turbines, compressors, and valves it makes are equipment, a longer-cycle business with its own demand drivers, including the AI power buildout. The promo’s income framing leans on the steady services dividend, but the growth story lives mostly in the equipment side.
For the dividend itself, the math is modest: Baker Hughes distributed about $910 million in 2025, roughly 1.5 percent on a nearly $59 billion market cap. Our oil dividend stocks piece covers what real oil income actually looks like.
The International Split
Baker Hughes carries a geographic profile worth spelling out, because it is the clearest difference between it and its two main rivals. Roughly three-quarters of its services business sits outside North America, which means its results track international and offshore spending more than domestic shale activity. Schlumberger shares some of that tilt, while Halliburton leans the other way, toward North American basins.
That split matters for the cycle. When international operators, the national oil companies and offshore drillers, increase their budgets, Baker Hughes benefits more directly than a shale-focused rival would. When North American spending leads the recovery, the advantage flips. Right now the recovery is broad enough to lift the whole group, but the geographic mix determines who wins most when the cycle inevitably narrows.
The Underinvestment Setup
The current recovery has a specific origin worth understanding. After the 2015 to 2020 downturn, the industry spent years underinvesting in equipment, crews, and new capacity, because operators were slashing budgets and services companies were shrinking to survive. That underinvestment created a backlog of deferred work, and it is now showing up as the order strength Baker Hughes reported, a 29 percent jump in the second quarter of 2026.
The setup is real, but it is also finite. A recovery driven by deferred spending eventually normalizes, and the question for investors is whether the equipment story, the turbines riding AI demand, extends the cycle beyond what the oilfield underinvestment alone would support.
The Bottom Line
Oil and gas services is the essential, unglamorous backbone of the energy economy, and it is currently in a recovery after a decade of underinvestment. Baker Hughes is a solid way to own that recovery, with a twist: its real forward-looking story lives not in the rig count but in the turbine orders riding the AI electricity boom.
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