Recovery for the oilfield services sector remains at the mercy of producers and is by no means a sure thing, but expectations for a modest rebound continue.

In a recently released report, Moody's said EBITDA for the sector would "grow by a modest 6%-8% in 2017 and more substantially in 2018" if oil prices remain in an expected range between $40 per barrel and $60/bbl through next year.

"I think we're cautiously optimistic," Moody's Vice President for Oil & Gas Sajjad Alam told S&P Global Market Intelligence. "They're going to go sideways [in terms of earnings] for a while long before they start to crawl out of this."

Those earnings, however, are contingent upon exploration and production companies continuing to expand drilling operations. Alam said the steady increase in demand since early 2016 has helped services companies stabilize after being brutalized during the 2014-2015 oil and gas price collapse.

"We've seen rig counts rising, and there's a greater demand for things like frack crews," he said. "Producers said they have seen a gradual increase [in rates], but nothing major."

S&P Global Ratings Analyst Ben Tsocanos noted that a sense of normalcy has started to return to the sector, even if there is concern about the recent drop in rig counts around the U.S. "I would say things have stabilized. I don't know if we're looking at a whole lot of upside for next year as the rig count has plateaued and maybe comes back a little bit, but we think the second half will be better than the first half and as good in 2018 as it was in the second half," he said.

One potential shadow looms: the prospect of a reduction in drilling activity in response to continued low prices. Major players such as ConocoPhillips and Anadarko Petroleum Corp. have already announced plans to cut their capital expenditures for this year and 2018. If more producers were to follow suit or prices dropped further, oilfield services companies would bear the brunt of it.

"If prices were to drop below $40 a barrel, that could be real trouble for oilfield services companies, a lot of whom don’t have strong balance sheets," Alam said.

But Tsocanos said it would be a surprise to see a price backtrack to the point where oilfield services companies are in serious jeopardy again. "[A price below $40/bbl] isn't terribly likely. We're not modeling that," he said. "I think the worst on service side pricing is over and we're getting to the point where these onshore companies can make money. It's not the go-go days of 2014, but the dark days of 2016 are past."

One potential positive for the sector is that producers probably will not attempt to squeeze concessions out of them again in order to keep business if a price downturn reoccurs. "There's not much more they can do," Alam said. "With the improved technology and efficiencies we're seeing, [producers] can make money at $40."

Tsocanos agreed, noting that some services companies are now looking for deals on more favorable terms.

"I think the worst is certainly over. We're kind of, at least, getting to the end of the bankruptcy cycle. There's a couple of lame ducks out there that may not make it, but … I don't think there's any more to be gotten out of price concessions," he said. "Companies are trying to claw a little of that back, because they can't survive at service pricing levels."

With West Texas Intermediate crude prices bouncing back and forth between the mid- and high $40/bbl range — prices stood at $49.18 in early afternoon trading Sept. 7 — services companies are hoping for a little more of a surge.

"I think that $50 mark is very important psychologically," Tsocanos said. "It's more constructive for oilfield services."

With the sector reliant on an uncertain E&P segment for better days, or at least fewer bad days, is there much of a difference between oilfield services companies resting easy or enduring a lot of sleepless nights? "Not much," Alam said.

S&P Global Ratings, like S&P Global Market Intelligence, is owned by S&P Global Inc.