NEW YORK ( TheStreet) -- General Electric's (GE - Get Report) buy of Lufkin Industries (LUFK) doesn't strike me as a reason to get enthusiastic about oil drilling services. In fact, it's doing a bit of the opposite for me.
That's because oil services stocks in general, and Lufkin in particular, have been a very bad place to be invested in the past 18 months, greatly underperforming the rest of the energy sector and the S&P index at large. While there is a certain value in paying out a premium and buying a company when its shares are at a relative low, there is also the question of why it is GE that is paying it.
After all, GE, while involved in oil and gas, is not an energy company. Lufkin is a very specific oil services group, operating in advanced injection technologies that help in tight oil plays but are more often used in augmenting the lifespan of wells that have begun to naturally attenuate production.
Lufkin is also hardly alone in the list of oil services companies that are at very low levels and could be seen as "value priced" -- if there were interest in further consolidation. But I don't see anything substantial in the flood of speculation on which might be the next oil services company slated for takeover.I might have felt differently if the Lufkin suitor was an oil services company convinced that the rig counts had reached their downside limit. But the Lufkin buyer wasn't Schlumberger (SLB) or Halliburton (HAL). It was GE. That, to me, sounds more like the decision of an accountant and less of an oil man. I talk more about the deal with Joe Deaux in the video above. At the time of publication the author had no position in any of the stocks mentioned. Follow @dan_dicker This article was written by an independent contributor, separate from TheStreet's regular news coverage.