Wed, Apr. 27, 8:59 AM
- Baker Hughes (NYSE:BHI) 3.8% premarket after posting a massive Q1 earnings miss, with a $1.58/share loss vs. analyst consensus estimate of a $0.34 loss on a 42% Y/Y drop in revenues to $2.67, as below expectations.
- Q1 North America revenue fell 28% Q/Q, to $819M driven by lower U.S. onshore activity and associated price erosion, but operating margins were 15% due to cost-saving measures and lower depreciation expense from prior-year impairments; international revenue fell 19% Q/Q as activity declined significantly in Brazil, southeast Asia, the North Sea, west Africa and Argentina.
- BHI says it expects the North American rig count to fall 30% in Q2 from the prior quarter before beginning to stabilize in H2, although it does not expect activity to meaningfully increase in 2016; BHI sees the international rig count falling steadily through year-end due to limited new projects in the pipeline.
- BHI says Q1 free cash flow was -$103M, although the figure was $193M when excluding $296M in merger-related and restructuring payments.
Wed, Apr. 27, 8:07 AM
Tue, Apr. 26, 5:30 PM
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Tue, Apr. 26, 2:59 PM
- Even if the merger of Halliburton (HAL -0.2%) and Baker Hughes (BHI +0.9%) falls apart, Citi’s Scott Gruber and his team are confident that both will be fine, reiterating Buy ratings on both stocks.
- BHI still has its technology advantage, the firm says - recalling that HAL wants BHI’s directional drilling, bits, artificial lift and chemicals while their completion products are strong - and although morale may have suffered in the run-up to a merger, the staff largely remains.
- BHI also should have $5B of cash on its balance sheet by the end of Q3 in the absence of a merger, which it could use to “upgrade their frac segment, attract new talent and execute a large buyback.”
- Citi says HAL remains its favorite name given its leadership position in shale services, and the firm believes the shale service recovery should surprise positively and HAL's free cash flow should structurally improve.
- Now read Halliburton-Baker Hughes deal probably dead, analysts say
Mon, Apr. 25, 10:16 AM
- Analysts say Halliburton's (HAL -0.1%) postponement of its Q1 earnings report until May 3 likely means its merger agreement with Baker Hughes (BHI -0.8%) will be terminated.
- Baird's Daniel Leben says that while HAL did not explicitly state in its Friday pre-announcement of Q1 revenues that the deal was off, the decision to delay its conference call and its move away from maintaining greater-than-required operational capacity are "signs the BHI deal will break after April 30."
- Jefferies analyst Brad Handler concurs, adding that investors largely expected the outcome once the Justice Department filed its suit to block the merger in early April and thus expects limited share price reaction.
- Baird reiterates its Neutral rating and $38 price target on HAL, and Jefferies maintains its Buy rating and $43 target price.
- Now read 'Life has changed' for Halliburton
Fri, Apr. 22, 5:32 PM
- Halliburton (NYSE:HAL) says Q1 revenues totaled $4.2B, a 17% Q/Q decline but slightly ahead of the $4.14B analyst consensus estimate.
- HAL says Q1 revenue in North America was $1.8B, down 17% Q/Q vs. a 27% decline in the average U.S. rig count, with a $39M operating loss, driven by reduced activity throughout the U.S. land sector, particularly pressure pumping services; Q1 international revenue was $2.4B, down 18% Q/Q, with operating income of $310M, down 38% Q/Q, driven by lower completion tools and software sales.
- HAL says it cut more than 6K jobs during the quarter, and will book a $2.1B Q1 expense for cutting jobs and writing off assets.
- HAL also says it is postponing next Monday's scheduled earnings conference call to May 3, citing the upcoming April 30 deadline in its merger agreement with Baker Hughes (NYSE:BHI).
- Now read Earnings: Q1's over for HAL, what's ahead?
Wed, Apr. 20, 5:45 PM
- Wells Fargo analysts say they are sticking with Halliburton (NYSE:HAL) as their top picks among oil service stocks even as the proposed merger with Baker Hughes looks increasingly iffy.
- The firm says it is re-adjusting its rankings with a bias towards large cap names along with high level of conviction towards execution, and expects the market to pay a premium multiple for the best-in-class names in the next multi-year recovery.
- In order, Wells' favorites in the sector are a stand-alone HAL, Baker Hughes (NYSE:BHI), U.S. Silica (NYSE:SLCA), Nabors Industries (NYSE:NBR), FMC Technologies (NYSE:FTI) and Schlumberger (NYSE:SLB); it maintains an Outperform on Weatherford (NYSE:WFT) but moves the stock down in the rankings based on debt concerns and re-investment capacity in a recovery.
- Now read Schlumberger is Barclays' top pick in North America oilfield services
Wed, Apr. 20, 11:29 AM
- Halliburton’s (HAL +0.6%) bid to buy Baker Hughes (BHI -0.9%) faces a formal complaint as soon as this month from European Union regulators through a statement of objections that would list concerns about how the deal would hurt competition throughout the EU, Bloomberg reports.
- HAL’s plans have been stalled repeatedly by the EU as regulators seek more information about the deal; last week, the EU set a new deadline of Aug. 11 for a final ruling on the merger.
- The deal already faces opposition from the U.S. Justice Department, which has sued to block the deal saying it threatens to eliminate head-to-head competition in 23 products and services used in oil exploration.
- Now read Halliburton: $3.5 billion break-up fee... ouch!
Wed, Apr. 20, 10:33 AM
- With the chances of a Halliburton (HAL -0.4%) takeover dimming as the Justice Department files suit, Baker Hughes (BHI -0.1%) ought to consider a merger of equals with National Oilwell Varco (NOV -2.4%) as “the best route to value creation over the next cycle,” according to J.P. Morgan analyst Sean Meakim.
- A BHI-NOV merger would be more than a marriage of convenience, Meakim says, adding that “neither side needs a transaction from a balance sheet perspective, but each could benefit strategically” and a deal would not face significant regulatory hurdles.
- The agreement between BHI and HAL is scheduled to expire on April 30, but Meakim points out that the merger deal is not dead, and HAL likely will to fight hard to find a path to deal completion and avoid the $3.5B breakup fee.
- The firm rates BHI at Neutral with a $36 price target.
- Now read Why shares of National Oilwell Varco will likely go down
Mon, Apr. 18, 10:25 AM
- The energy sector (XLE +0.1%) pokes into the green as crude oil prices pare earlier losses even after the collapse of the Doha meeting, and it's a mixed bag among the top global oil companies in early trading: XOM +0.1%, CVX +0.3%, RDS.A -0.9%, BP -0.3%, TOT -0.4%.
- Kuwait may have achieved what Doha failed to do, at least in the short term, as a labor strike that began Sunday has cut the country's production by 60%, shuttering 1.7M bbl/day, slightly more than H1's global surplus that caused prices drop to a 12-year low in January.
- Some oil analysts say the lack of a Doha deal is better for oil prices in the long run now that the rebalancing process of supply and demand can continue to its natural conclusion.
- Other noteworthy names: KMI -0.1%, CHK -4%, MRO -1.4%, COP +0.1%, SLB +0.2%, HAL +0.2%, BHI -0.7%, OXY +0.5%, APC -0.1%, HES +0.6%, ENB +0.8%, ETP -0.4%, EPD +1.5%.
- ETFs: XLE, VDE, ERX, OIH, XOP, FCG, ERY, GASL, DIG, DUG, BGR, XES, IYE, IEO, FENY, IEZ, PXE, PXI, FIF, PXJ, RYE, NDP, GUSH, PSCE, DRIP, DDG, FXN
- Now read No deal! Our 'enfant terrible' Saudi Arabia did it again
Mon, Apr. 18, 9:07 AM
Thu, Apr. 14, 2:57 PM
- P-E firm Carlyle Group (CG -1%) is in serious talks to buy oilfield services assets from Halliburton (HAL -0.4%) and Baker Hughes (BHI +5.2%) that could be valued at more than $7B, Dow Jones reports.
- The talks would mark a shift for HAL and BHI, which have focused on overcoming Justice Department objections to their planned merger by attempting to sell the assets to General Electric (GE +0.1%); GE remains in the mix, but reaching agreement on a price for the assets has been difficult, according to the report.
- The need for HAL and BHI to strike a divestiture deal took on increased urgency last week when the DoJ filed an antitrust lawsuit challenging their proposed $35B merger.
- Now read The Halliburton-Baker Hughes merger is falling apart - what happens next?
Tue, Apr. 12, 6:19 AM
- EU competition regulators have resumed their scrutiny of Halliburton's (NYSE:HAL) plan to acquire smaller rival Baker Hughes (NYSE:BHI), a deal which U.S. authorities say is uncompetitive and want to block.
- The European Commission, which halted its investigation into the $35B deal last month while waiting for more details from the companies, will now decide by Aug. 11 whether to clear or veto the takeover.
Fri, Apr. 8, 1:45 PM
- Analysts are split on Baker Hughes' (BHI +4.3%) future if its merger with Halliburton (HAL +4.4%) fails, but Jefferies squarely comes down on the side of pessimism, downgrading BHI to Underperform from Buy while saying the DoJ lawsuit and scrutiny from other world regulators make the acquisition very unlikely.
- The DoJ lawsuit is "daunting," Jefferies says, and even if HAL-BHI prevails, the merger may be unable to clear regulatory resistance elsewhere in the world, and an aggressive share buyback or quick acquisition by another company is not likely.
- Analysts at Wells Fargo, Citigroup and FBR are among those still optimistic toward BHI even without a tie-up, but Deutsche Bank, Evercore ISI and Jefferies not so much (I, II, III, IV).
- Now read Including a $3.5 billion breakup fee, Baker Hughes is worth $20
Thu, Apr. 7, 3:33 PM
- Halliburton (HAL -0.6%) and Baker Hughes (BHI -1.8%) are lower today in the wake of yesterday's DoJ decision to block their proposed merger, when both stocks rose in an oil price surge-fueled group rally.
- Even with much lower odds of closing, FBR analysts still like BHI's risk/reward - if the deal fails, BHI would benefit from the $3.5B breakup fee, with the ability to fully implement restructuring initiatives that have been constrained by the merger deal; if the deal succeeds, FBR believes the stock will deliver a 40% return, all else constant, within 3-4 months.
- FBR also thinks any "Hail Mary” solution likely still relies on GE (GE -0.9%), and believes GE is the “prospective buyer” with whom HAL has had “lengthy discussions.”
- Now read Baker Hughes a Buy if Halliburton deal folds, Wells Fargo says and Baker Hughes downgraded at Deutsche Bank, as deal close "a coin flip at best"
Wed, Apr. 6, 2:23 PM
- Even while the target company traditionally fares worse than the acquirer when a merger deal dies, Wells Fargo remains bullish on Baker Hughes (BHI +8%), seeing "an exceptionally strong balance sheet and operational upside potential off of a depressed base."
- While acknowledging the risk with a suddenly stand-alone BHI in the state of the company’s operational capabilities after a wave of departures, Fargo sees some positives for BHI that it says are going overlooked, most notably the strong balance sheet, with ~$5B in cash after a $3.5B breakup fee and BHI's significant cost cutting capacity to improve margins.
- Citi analyst Scott Gruber estimates BHI would have $5B-plus of cash vs. $4B of debt if the deal breaks apart by Q3, which could prompt a large stock buyback; an enriched BHI also could go shopping for a lower tier competitor at a fat discount thanks to depressed oil and stock prices.
- Bloomberg's Liam Denning notes that factoring in the breakup fee pushes BHI's pro forma EBITDA multiple down to ~9x from 10.8x 2017 EBITDA without the adjustment.
- Now read Baker Hughes downgraded at Deutsche Bank, as deal close "a coin flip at best"
Baker Hughes, Inc. is a supplier of oilfield services, products, technology and systems to the worldwide oil and natural gas industry. It also provides industrial and other products and services to the downstream refining, and process and pipeline industries. The company's oilfield products and... More
Sector: Basic Materials
Industry: Oil & Gas Equipment & Services
Country: United States
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