Fri, Feb. 19, 6:43 AM
- Price target of $54 (implied upside 28.5%).
- "Diversified service companies are the best positioned to weather the current commodity cycle and come out stronger on the other side. While large cap companies have always taken share in the downturn, the winners in this cycle not only need scale but also innovative product and process capabilities to improve productivity and increase customer returns. With capex budgets in free fall and customers, competitors, and partners all razor focused on surviving, there should be a natural progression to minimize counterparty risk, which should lead to even further market share gains. BHI is the third largest oilfield service company in the world and its proposed merger with HAL creates a formidable international competitor for SLB."
- Firm still believes the proposed merger with Baker Hughes will be consummated. "However, the arb spread has been steadily rising and currently stands at over 25%. We would expect management to immediately cancel the transaction if there were material obstacles to a successful outcome. Obviously, this would be an opportune time to spend $3.5 billion on rebuilding your business and rewarding your employees. Customer concerns over competition are likely the greatest risk to regulatory approval, but we see the same customers funneling business to BHI to ensure a viable third option to Halliburton and Schlumberger."
- Firm suggests investors "embrace" the oil-market volatility and buy on short-term dips, "becoming more aggressive with the severity of the pullback."
- See also: Baker Hughes: Low Oil Prices Are A Risk To The Pending Merger (Feb. 8)
Tue, Feb. 16, 6:57 PM
- George Soros, who has warned of a repeat of the 2008 financial crisis but this time with China as the focus of most problems, exited stakes in several energy-related companies and took a position in Pfizer (NYSE:PFE) during Q4.
- According to a 13-F filing, the Soros fund disclosed it had exited stakes in Chevron (NYSE:CVX), Chesapeake Energy (NYSE:CHK) and NRG Energy (NYSE:NRG), and reduced its position in Dow Chemical (NYSE:DOW); Soros bought ~685K shares in Baker Hughes (NYSE:BHI), which is merging with Halliburton (NYSE:HAL), as well as 50.7K shares in Kinder Morgan (NYSE:KMI).
- Soros also closed his stake in Olin Corp. (NYSE:OLN) and cut his stake in Vista Outdoor (NYSE:VSTO), and took a position valued at $216M in Synchrony Financial (NYSE:SYF), which was spun off from GE.
- Overall, the value of Soros’ holdings fell to $6.05B as of Dec. 31, from $6.61B at the end of Q3.
Tue, Feb. 9, 11:59 AM
- Halliburton (HAL -4.3%) plans to divest Baker Hughes' (BHI -1.7%) offshore drilling and completions fluids division and the bulk of BHI’s completion systems, adding more assets to the list of businesses it plans to sell to appease antitrust regulators, Bloomberg reports.
- HAL already had agreed to sell BHI’s core completions business, which provides equipment for controlling the flow of oil as it is readied for production, and has decided to sell most of the rest of BHI’s related completions operations at the behest of regulators, according to the report.
- HAL's acquisition of BHI was scheduled to close last year but has been delayed to no later than April 30 as the companies seek to resolve antitrust concerns in the U.S. and abroad.
Mon, Feb. 8, 3:52 PM
- Baker Hughes (BHI -4.3%) is downgraded to Equal Weight from Overweight with a $47 price target at Morgan Stanley, which notes that the North American rig count is entering a free fall phase with further contractions expected in the near future.
- The firm points to growing risks related to the pending deal between BHI and Halliburton (HAL -1.1%), and believes the market is not pricing in the necessary risk associated with a potential failed deal.
- BHI's weak 4Q results raise concern around the company’s ability to execute as a standalone company, Morgan Stanley says.
Wed, Feb. 3, 10:48 AM
- Halliburton (HAL -0.8%) is given an additional 20 working days by the European Union to come up with a package of asset sales that will ease competition concerns over its proposed takeover of Baker Hughes (BHI +1.2%).
- HAL says it will offer remedies soon, after the EU pushed back the deadline for reviewing the deal to June 23 from May 26.
- The EU merger authority opened an in-depth probe into the deal on Jan. 12, citing concerns that combining the world's no. 2 and no. 3 oilfield services suppliers may harm competition and increase prices.
Thu, Jan. 28, 1:08 PM
- Baker Hughes (NYSE:BHI) declares $0.17/share quarterly dividend, in line with previous.
- Forward yield 1.6%
- Payable March 23; for shareholders of record March 2; ex-div Feb. 29.
Thu, Jan. 28, 12:39 PM
- Baker Hughes (BHI +4%) predicts the number of oil and gas rigs active globally, which already has declined 46% in the past year, could fall by another 30% in 2016 if oil prices fail to recover from current levels.
- "BHI's management team has been the most bearish about the oilfield service cycle, but has also been the most correct as the duration and severity of the downturn has continued to exceed the market's initial expectations," Barclays analysts say.
- CEO Martin Craighead says BHI's customers among oil and gas production companies are facing “more acute” challenges of maximizing production, cutting costs and protecting cash flows, thus BHI's role in the industry is "more relevant today than it has ever been before."
- But the industry downturn has hurt the usage of BHI's services and the prices it can charge; FY 2015 revenues fell 36% Y/Y to $15.7B, and Q4 revenues sank 49% Y/Y to $3.39B.
- The CEO says BHI remains committed to closing its pending merger with Halliburton (HAL +4.7%), despite the long regulatory delays that have raised questions about the deal’s ability to consummate.
Thu, Jan. 28, 8:06 AM
- Baker Hughes (NYSE:BHI): Q4 EPS of -$0.21 misses by $0.11.
- Revenue of $3.4B (-48.8% Y/Y) misses by $70M.
Wed, Jan. 27, 5:30 PM
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Mon, Jan. 25, 8:53 AM
- Halliburton (NYSE:HAL) -1.8% premarket after reporting better than expected Q4 earnings but a 42% Y/Y drop in revenues, including a 54% plunge to $2.16B in its North American operations, which account for more than half the company's revenue.
- The $0.31/share in adjusted Q4 earnings exclude a $192M impairment charge and costs related to its pending acquisition of Baker Hughes (NYSE:BHI): HAL says it recently offered an enhanced set of divestitures to regulators in an effort to resolve competition-related concerns.
- HAL says Q4 operating margins in its North American operations improved 1.6 percentage points, driven by cost reduction efforts and year-end completion tool sales in the Gulf of Mexico.
- HAL does not provide guidance in its release, but Q1 consensus estimates call for EPS of $0.15 on revenues of $4.79B; for the full year, EPS is estimated at $0.87 on revenues of $20.13B.
Mon, Jan. 25, 8:08 AM
- Schlumberger (NYSE:SLB) is set to gain unconditional approval from the European Union for its $14.8B takeover of equipment maker Cameron International (NYSE:CAM), Reuters reports.
- Antitrust experts have predicted that the deal would draw minimum scrutiny since the companies offer complementary product lines, while Halliburton's (NYSE:HAL) proposed $35B offer for Baker Hughes (NYSE:BHI) would face a tougher time because of concerns it could push up prices for oil and gas exploration in Europe.
- U.S. antitrust regulators cleared the deal without conditions last November.
Tue, Jan. 12, 2:14 PM
- European regulators say they are opening a full-blown antitrust investigation into Halliburton's (HAL -2.5%) planned takeover of Baker Hughes (BHI -2.2%), warning the deal raises “serious potential competition concerns.”
- The European Commission, the European Union’s top antitrust authority, says it is opening an in-depth probe after its initial inquiry showed HAL and BHI were close competitors and found serious potential concerns in more than 30 product and service lines.
- HAL and BHI call the investigation a "normal step" in the review process, and that the companies expect to offer "a substantial remedies package... that will address any substantive competition concerns."
Wed, Jan. 6, 9:57 AM
- Halliburton (HAL -1.4%) passed on a midnight deadline to propose remedies to European Union regulators in its plan to buy Baker Hughes (BHI -1.5%), meaning it likely will face a protracted antitrust review, Bloomberg reports.
- The EU is now expected to open an in-depth investigation into antitrust concerns by Jan. 12, the EU's cutoff for an early ruling, which would push the regulator’s final deadline for a decision into May, beyond the companies’ self-imposed April 30 date to close the deal.
- While the European Commission seldom waits until the last minute, the timing puts pressure on HAL to build a package of commitments that convinces the EU authority to give its blessing.
Tue, Jan. 5, 3:57 PM
- C&J Energy Services (CJES -14.3%) and National Oilwell Varco (NOV -2.8%) are sharply lower after Keybanc downgraded the stocks to Sector Weight from Overweight, as the oil services industry emerges from a difficult year of cost-cutting and downsizing.
- "If global demand for oil and gas drilling services continues to slide, additional cost-saving actions will be taken," the firm says.
- Keybanc upgraded Halliburton (HAL -0.2%) and merger partner Baker Hughes (BHI -2.8%) to Overweight from Sector Weight, but both stocks look to finish lower.
Dec. 15, 2015, 3:15 PM
- Halliburton (HAL +1.3%) and Baker Hughes (BHI +3.6%) say the U.S. Department of Justice has informed them that remedies offered so far to address the government's merger concerns are not sufficient.
- The companies agree to extend the time period for closing the deal to no later than April 30, 2016.
- The DoJ says it will assess further proposals from HAL-BHI and look forward to continued cooperation in its continuing investigation.
- Shares resume trading after a brief halt.
- Earlier: Bloomberg: U.S. not satisfied with Halliburton-Baker Hughes merger plan
Dec. 15, 2015, 12:57 PM
- Shares of Halliburton (HAL +2.9%) and Baker Hughes (BHI +4.2%) sink and then jerk higher after a Bloomberg reports says U.S. antitrust officials are not satisfied with HAL’s proposals for clearing its purchase.
- Justice Department officials also reportedly do not expect to make a decision on the merger until next year.
- The DoJ reportedly has been concerned that a HAL-BHI combination would make the oilfield services industry too concentrated and that proposed asset sales did not go far enough.
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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