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Oct. 21, 2015, 11:36 AM
- Baker Hughes (BHI +2.2%) pushes higher after Q3 earnings beat expectations despite a 39% Y/Y decrease in revenue, and saying it is seeing stronger interest in its upstream and refinery services designed to get the most out of existing wells.
- But BHI says it expects oilfield activity to continue to decline for the rest of the year, as well as continued pressure from oil companies to offer deeper discounts.
- For Q3, BHI says revenue fell Y/Y across all its geographic segments, with the biggest drop in North America, where revenues sank 57% to $1.4B, as average rig counts fell 54% and customers cut spending; Q3 revenue fell 23% for Latin America and 21% in the Middle East and Asia Pacific division.
Oct. 21, 2015, 8:03 AM
- Baker Hughes (NYSE:BHI): Q3 EPS of -$0.05 beats by $0.09.
- Revenue of $3.79B (-39.4% Y/Y) in-line.
Oct. 20, 2015, 5:30 PM
Oct. 15, 2015, 5:11 PM
- Schlumberger (NYSE:SLB) -0.9% AH after reporting slightly better than expected Q3 earnings, as deep cost cuts and efficiency improvements helped ease the pain of a 47% Y/Y decline in North America revenues to $2.3B.
- SLB says Q3 revenue from outside North America, which accounted for nearly three quarters of its total revenue, fell 27%; revenues fell 6% Q/Q globally and 4% Q/Q in North America,
- SLB says the market outlook for oilfield services "looks increasingly challenging with activity expected to be reduced further, as lack of available cash flow exhausts capital spending for a number of our customers, leading them to take a conservative view on 2016 E&P spending in spite of any gradual improvement in oil prices."
- SLB reaffirms FY 2015 capex of ~$2.5B.
- U.S. oil services peers Halliburton (NYSE:HAL) and Baker Hughes (NYSE:BHI) are scheduled to report earnings next Monday and Wednesday, respectively.
Oct. 6, 2015, 8:11 AM
- ValueAct Capital turns up the heat on Baker Hughes (NYSE:BHI), saying in an SEC filing that it believes shares are undervalued and intends to discuss ways to enhance shareholder value with BHI's board.
- ValueAct says it may want to add a representative to BHI's board, and plans to discuss the company’s M&A strategy, executive compensation and capital allocation, and other items.
- The hedge fund owns a 5.3% stake in BHI; in January, after BHI agreed to be acquired by Halliburton (NYSE:HAL) for ~$35B, it disclosed a 5.1% stake for ~$1.22B.
Sep. 28, 2015, 8:06 AM
- Halliburton (NYSE:HAL) and Baker Hughes (NYSE:BHI) announce plans to sell additional businesses in connection with their pending $35B merger.
- HAL will divest its expandable liner hangers business, while BHI will divest its core completions business, which includes its packers, flow control tools and subsurface safety systems; its sand control business in the Gulf of Mexico; and its offshore cementing businesses in Australia, Brazil, the Gulf of Mexico, Norway and the U.K.
- HAL and BHI say the businesses being divested amassed $5.2B in revenue in 2013, but have not reached an agreement with regulators about the adequacy of the divestitures.
- The companies also say they have pushed back the U.S. Justice Department’s antitrust review period by three weeks, to mid-December from Nov. 25, after previously extending the period in July.
Sep. 22, 2015, 2:45 PM
- Weatherford's (WFT +9.7%) cancellation of its plans to raise $1B in a stock and debt offering is good news for the company, Jefferies analyst Brad Handler says as he reaffirms his Buy rating on the stock.
- The analyst says "the 'on paper' benefit of adding drill bits and upgrading Weatherford's directional drilling capabilities/platform, and that Weatherford's global footprint points to meaningful synergies... yet more important for us was the risk of further dilution for equity holders."
- The money could have been used to buy assets from Halliburton (HAL +0.2%) as it tries to acquire Baker Hughes (BHI -0.6%); WFT's apparent withdrawal means that GE (GE -0.2%) could be the only player left that can afford the assets.
- But the conflicting announcements from WFT are a "blow to management credibility," analysts at Tudor Pickering say.
Sep. 21, 2015, 11:39 AM
- Weatherford's (WFT -9%) plan to raise $1B fuels speculation that the company is gearing up for an acquisition, possibly a piece of the asset sales Halliburton (HAL +0.9%) needs to gain regulatory approval for its proposed $35B buyout of Baker Hughes (BHI +2.4%).
- WFT’s announcement “lends credibility” to the mounting speculation that HAL soon may unveil a buyer for the first two of its required divestitures, some analysts say.
- The deal spread on the HAL-BHI transaction currently stands at ~14% as concerns remain as to whether necessary asset sales can be completed and the transaction can be closed.
Sep. 16, 2015, 5:18 PM
- Cowen analyst James Crandell thinks the current down cycle in oil is "the worst ever" in terms of magnitude of the decline in exploration and production spending and thus in its impact on oil services companies (NYSEARCA:OIH); unlike past cycles, Crandell says there is a growing realization that a strong recovery in oil prices is not likely.
- Crandall estimates that when all is said and done, the 2015-16 down cycle will see a decline in global E&P spending of 35%-40%, with a drop internationally of 30% and in North America of 50%.
- The analyst cuts his price target on Baker Hughes (NYSE:BHI) to $56 from $61, Halliburton (NYSE:HAL) to $38 from $40, and Schlumberge (NYSE:SLB) to $90 from $100, but raises his target on Cameron International (NYSE:CAM) to $65 from $51.
Sep. 14, 2015, 5:15 PM
- GE has made offers in recent weeks for parts of the drilling services and drilling bits businesses Halliburton (NYSE:HAL) is selling to win regulatory approval to buy Baker Hughes (NYSE:BHI), Bloomberg reports.
- Weatherford (NYSE:WFT) and Nabors Industries (NYSE:NBR) also are bidding for the services entity, which is part of HAL's Sperry Drilling arm, according to the report; a number of P-E firms and industrial companies also are said to be bidding for the businesses.
- HAL said last week it was selling the units separately and considering bids from “a variety of interested parties” after the NY Post reported the Justice Department could force it to sell the assets to a single buyer.
- Final offers for both units are due within four weeks, Bloomberg says.
Sep. 11, 2015, 8:12 AM
- Halliburton (NYSE:HAL) -1.2% premarket following a NY Post article that says the Justice Department wants it to find a single buyer for ~$7.5B of assets instead of selling them to different suitors in order to gain approval of the company's proposed purchase of Baker Hughes (NYSE:BHI).
- DoJ’s single-buyer mandate leaves HAL with few options other than selling the package of assets to the likes of GE or Siemens (OTCPK:SIEGY), according to the report; it is not known if either company is willing to pay a reasonable price for the assets.
Sep. 4, 2015, 12:23 PM
- Sclumberger’s (NYSE:SLB) purchase of Cameron International (NYSE:CAM) should easily close, with optimism growing that Halliburton's (NYSE:HAL) bid for Baker Hughes (NYSE:BHI) also will close, and the deals mean more oil company M&A is on the way, FBR Capital analyst Thomas Curran believes.
- The wave of heavyweight deals likely is not over yet, Curran says, seeing Weatherford (NYSE:WFT) as the highest probability takeout with the broadest set of plausible strategic suitors; National Oilwell Varco (NYSE:NOV) is viewed as having a high likelihood of entering into a big deal, although probably as an acquirer, and FMC Tech (NYSE:FTI) could puruse a full combination with Technip, its 50/50% JV partner in Forsys Subsea.
Aug. 28, 2015, 11:29 AM
- Traders willing to bet Halliburton's (HAL +1.4%) proposed deal for Baker Hughes (BHI +1.2%) can survive regulatory scrutiny stand to amass more than $3B in profit, and Schlumberger’s (SLB +1.9%) purchase of Cameron International (CAM +1.7%) could help their chances, according to a Bloomberg analysis.
- With SLB - already the world’s largest oilfield-services provider - getting even bigger, HAL and BHI could have a better argument that they need to merge to get stronger, and the deal could provide more incentive for contractors to bid on HAL and BHI assets as they seek to stay competitive; HAL and BHI have committed to divest as much as $7.5B in assets, and several buyers appear to be interested.
- HAL shares stand to drop sharply without a deal, it would not have the merger’s cost-cutting opportunities to shield it from the slump in oil prices and shrinking revenue, and it would have to pay a $3.5B breakup fee if the deal fails to gain regulatory approval.
Aug. 26, 2015, 3:25 PM
- Analysts say Schlumberger’s (SLB -4.2%) acquisition of Cameron International (CAM +41.7%) is not particularly surprising, given SLB's two years of experience working alongside CAM through their OneSubsea joint venture and track record of soaking up JV partners.
- The combination effectively allows the two companies to extract the type of cost savings found at OneSubsea across the rest of their businesses; SLB thinks it can find pretax benefits of $600M in the second year after the deal, most of which will come from cost-cutting.
- Citigroup says the deal will firmly establish SLB as the dominant and most diversified oilfield service provider, with total estimated revenues for the combined entity of $46B in 2015, a figure the prospective Halliburton (HAL +2.3%) and Baker Hughes (BHI +2.5%) combo cannot match.
- SLB is making a strategic bet on a recovery in deepwater drilling, even if not in 2016, Tudor Pickering says; with 7M-plus bbl/day of global oil production coming from deepwater reservoirs, it makes sense that offshore activity eventually will rebound.
- The deal is not likely to touch off an M&A wave in the oilfield services industry because the global crude slump has strained the finances of many companies, leaving few able to make such a move, says Edward Jones analyst Rob Desai.
- But several potential acquisition targets in the services industry are higher: OII +8.3%, DRQ +7.4%, FTI +6.5%, NOV +4.1%, FET +3%.
Aug. 25, 2015, 6:29 PM
- The global market selloff and plunging oil prices have increased fears that some of this year’s largest takeover deals are at risk of falling apart, including Royal Dutch Shell’s (RDS.A, RDS.B) ~$70B offer for BG Group (OTCPK:BRGXF, OTCQX:BRGYY), Financial Times reports.
- Over the past week, the gap between the agreed price of several takeovers and the market price of the target companies’ shares has widened, which usually is interpreted as a signal of declining confidence that the transaction will complete as planned.
- Bets on the outcome of Shell’s deal represented the biggest trades being made by so-called event-driven hedge funds in Europe, at least one broker tells FT.
- Another deal spread to reach its widest level this week was that between Halliburton’s (NYSE:HAL) $35B offer for Baker Hughes (NYSE:BHI) and the target group’s market value.
Aug. 13, 2015, 7:27 PM
- Oil companies are bracing for "lower for longer” prices as a global supply glut persists, dragging U.S. crude to the lowest close since March 2009 at just above $42/bbl.
- More capitulation notes are out; Oppenheimer's Fadel Gheit wrote today that the "new normal" for oil in a recovery would be $65-$75, and that "the vast majority of oil companies are living beyond their means, with operating cash flow falling short of capital investments and dividend... Unless oil prices rebound significantly above future strip prices, oil stocks could sink further, as takeover premiums shrink with potential sellers significantly outnumbering potential buyers."
- The world’s biggest producers will need to trim investments by another $26B, Jefferies believes; capital spending will have to fall 10% next year, according to Banco Santander.
- CNBC's Bob Pisani says when energy stocks staged a brief bounce recently, investors repeated a frequent mistake: They tried to buy oil stocks ahead of a recovery in crude oil, instead of the other way around.
- The result today was heavy losses for many of the sector's big names: CHK -6.6%, MRO -5.4%, COP -2.8%, APC -2.4%, SWN -4.2%, RRC -4.4%, RIG -6.5%, DVN -3.9%, APA -2.6%, BHI -2.9%, CAM -3.5%.
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Baker Hughes Inc operates in the oilfield services industry. It provides products and services for drilling and evaluation of oil and gas wells, completion and production of oil and gas wells, fluids and chemicals and reservoir technology.
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