If the bottom of the cycle has arrived for the oil and gas services business, then Baker Hughes‘ $5.5 billion stock-and-cash deal to buy smaller rival BJ Services may well be the beginning of a broad consolidation in the industry. 

The premium is hardly as juicy as one might expect at 16 percent, given the deal seems such a perfect fit. BJ has a network of faster-growing international operations, while Baker is mostly focused on the big U.S. market. Plus, BJ has attractive high-pressure pumping technology.

But a look at the state of the market shows the urge to merge will probably keep pressure on premiums. Natgas futures are at seven-year lows on soaring inventories and sinking demand, weather forecasters see a mild winter ahead, and economic green shoots are still only at the sprout stage. Just this morning, OPEC voiced concern about rising oil stocks, hinting ominously that it may have to do something about that.

The deal effectively values BJ at $17.94 per share. Just over a year ago, the stock was selling for $34.90. As early as this spring, analysts at Citi and Goldman were issuing upbeat reports about prospects for oil services, anticipating an economic recovery would have a naturally incendiary effect on energy-related businesses. If a recovery is around the corner, BJ could be going for a song.