Energy service companies to surprise to the upside in 2015

With proactive reductions in capital spending, TD expects the space to generate free cash flow through 2015 and 2016. They also see current valuations reflecting balance sheet distress that does not exist, and continue to recommend an Overweight sector stance.  For the drillers (that’s N.American onshore), the ability to manage operating costs down quickly places them at the top of the relative preference in the short term - drilling companies have relatively low fixed operating costs, as field staff are predominantly paid for hours worked and not on salary. As rigs are designed to operate as a standalone unit, most…