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AI-Driven Selloff, Softer Frac Pricing Pressure Energy Services Outlook, TPH Says

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Investor optimism over oilfield service pricing weakened last week as frac pricing gains failed to materialize and AI-linked energy stocks sold off, TPH Energy Research said in its Monday energy weekly note.

Halliburton (HAL) and Liberty Energy (LBRT) cooled expectations for broader hydraulic fracturing pricing gains, TPH said.

Upstream companies had already signaled mostly stable pricing in early July, but the industry's reluctance to discuss its 2027 outlook surprised investors, according to TPH.

The AI-driven market pullback weighed on modular power companies. Shares of Solaris Energy Infrastructure (SEI) fell about 36% from June 30 before rebounding 18% since Thursday, TPH said.

TPH attributed the selloff to the unwinding of AI trades after leveraged South Korean retail investors and AI-focused funds, including Situational Awareness, managed by Leopold Aschenbrenner, liquidated positions.

Despite slower-than-expected contract awards, TPH said electricity markets remain short of power over the next several years. That supply imbalance continues to support the long-term investment case, according to the note.

Enbridge (ENB) said the Blackcomb pipeline, with about 2.5 billion cubic feet per day of Permian takeaway capacity, is moving toward commissioning. The startup should provide a clearer picture of Permian gas production, according to TPH.

TPH expects Blackcomb to further tighten the Waha basis by about 20 cents to 30 cents during the first half of 2027 as additional pipeline capacity enters service.

TPH added the market continues to overestimate Permian production shut-ins. Improvements in Waha pricing since the Hugh Brinson project and the Gulf Coast Express expansion entered service support a stronger outlook.

On natural gas, TPH said weaker prices are prompting producers to adjust 2027 development plans.

Price: $32.04, Change: $-0.22, Percent Change: -0.67%

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