Baker Hughes Inc.NYSE
Wed, Nov. 30, 3:28 PM
- Stephens analysts say “structurally oversupplied crude markets will take more time to balance” even with an OPEC production cut, which makes them reiterate support for their top six picks among oil services stocks: Baker Hughes (BHI +6.4%), Nabors Industries (NBR +22.8%), Schlumberger (SLB +5.2%), Oceaneering International (OII +6.8%), Superior Energy Services (SPN +17.8%) and Flotek Industries (FTK +13.6%).
- The firm says the companies "tend to have market leadership, stable balance sheets and/or cash flows, differentiated/diverse products or services or product line leadership.”
- Stephens says a production cut and follow-through could justify its base case to high case range for oil averaging $52/bbl in 2017 and $54/bbl in 2018, with low and high cases ~$10/bbl higher or lower in each year.
Wed, Nov. 30, 9:50 AM
- Shares of energy companies surge at the open, as hopes for an OPEC deal to cut production send crude oil futures soaring.
- Reports say Saudi Arabia is prepared to accept "a big hit" to production and agree to Iran freezing output at pre-sanctions levels.
- In early trading: XOM +2.2%, CVX +2.3%, RDS.A +3.6%, BP +3.4%, TOT +1.7%, STO +5.1%, PBR +8.1%, COP +7.2%, MRO +12.1%, APC +8%, DVN +12.7%, HES +9.5%, ENB +2.1%, PSX +0.8%, SLB +4.2%, HAL +8.3%, BHI +4.3%, KMI +4.8%, EPD +2.7%, ETP +3.8%, WMB +5.4%, RIG +11.3%, SE +2.2%, CHK +9.4%.
- ETFs: XLE, VDE, ERX, OIH, XOP, FCG, ERY, GASL, DIG, DUG, BGR, XES, IYE, IEO, FENY, IEZ, PXE, GASX, PXI, FIF, PXJ, RYE, NDP, GUSH, PSCE, DRIP, DDG, FXN, CRAK
Tue, Nov. 29, 6:20 PM
- Baker Hughes (NYSE:BHI) reaches an agreement with two P-E firms to create a new company consisting of its North American cementing and hydraulic fracturing operations under its BJ Services brand.
- CSL Capital Management and Goldman Sachs-affiliated West Street Energy Partners will own a combined 53.3% of the new privately-held company and contribute $325M in cash, with $175M earmarked to strengthen the new company's balance sheet and the remaining $150M going directly to BHI.
- BHI says the deal does not include its international pressure pumping businesses or its Gulf of Mexico offshore pressure pumping operations, which it will continue to operate.
- BJ Services' CEO will be Warren Zemlak, currently the head of CSL’s Allied Energy Services platform, which will become part of the new entity.
Tue, Nov. 29, 10:20 AM
- Crude oil continues to slide - WTI now -3.8% at $45.27/bbl, and Brent -3.8% at $46.40/bbl - dragging oil and gas equities (XLE -2.1%) down with it.
- Iran's oil minister says he is not prepared to reduce supply, and Saudi Arabia says it would not participate in a production deal without Iran and Iraq.
- Reuters reports that Iran has written to OPEC saying Saudi Arabia needs to cut oil output to 9.5M bbl/day; Saudi has said it was prepared to reduce its production only by 500K bbl/day from current levels of 10.5M.
- In early trading: XOM -1%, CVX -1.7%, RDS.A -1.4%, BP -1%, TOT -0.3%, STO -1.8%, PBR -3.7%, COP -2.9%, MRO -4%, APC -2.8%, DVN -2.7%, HES -3.6%, ENB -2.3%, PSX -1.2%, MPC -0.8%, SLB -2.2%, HAL -2.3%, BHI -2.1%, KMI -1.4%, EPD -2%, ETP -2.2%, WMB -2.4%, SE -2.3%, CHK -2.6%.
- ETFs: XLE, VDE, ERX, OIH, XOP, FCG, ERY, GASL, DIG, DUG, BGR, XES, IYE, IEO, FENY, IEZ, PXE, GASX, FIF, PXJ, RYE, NDP, GUSH, DRIP, DDG, FXN, CRAK
Tue, Nov. 8, 2:48 PM
- It's time to buy Baker Hughes (BHI -0.2%) now that the dust has settled regarding the company's merger with General Electric's (GE +0.6%) oil and gas business, Guggenheim analysts say.
- Guggenheim estimates the new company will generate $4.9B in EBITDA in 2018 - a bit less than the $5.2B-$5.5B forecast by the companies - and should trade at a peer average 10.6x EBITDA, implying a fair value for BHI of ~$63, but the firm believes synergies provide another ~$4 of upside if GE is able to realize greater cost savings.
- The firm also finds the industrial logic is sound: As Schlumberger (SLB -0.1%) has shown, regional and product line diversity enhance through-cycle returns and cash flow, which are benefits that the new BHI should be able to realize as a result of its pro forma portfolio.
Mon, Nov. 7, 3:19 PM
- General Electric (GE +2.5%) now contends it is paying $76/share for Baker Hughes (BHI +0.4%), according to an update of its original deal presentation that provides additional subsegment data, a timeline of GE oil and gas history, and its analysis of deal economics.
- GE also raises its pro-forma EBITDA forecast for 2018, now expecting $5.5B in 2018 EBITDA with GE and BHI each contributing $2.4B, $600M in cost synergies and $100M in revenue synergies.
- Evercore ISI analysts think GE will exceed its cost synergy estimate and sees fair value at $62-$67/share on the higher EBITDA estimate.
Wed, Nov. 2, 12:30 PM
- Baker Hughes (BHI -2.8%) continues lower and has now plunged ~9% since it agreed to merge with General Electric’s oil and gas business, and Nomura analysts say they "would not be surprised" to see more near-term selling pressure as investors who have been long the stock on a restructuring and takeout thesis seek their exit.
- The firm believes the recent exodus from the stock has "more to do with current shareholders’ distaste for holding onto a large chunk of equity in a mixed, full cycle product portfolio" than the math behind the merger.
- As the dust settles, Nomura thinks investors should gauge the debt-adjusted growth potential of the new BHI through 2020, which appears to be in excess of peers; the firm raises its BHI price target to $54 from $43.
Mon, Oct. 31, 6:50 PM
- Citigroup analysts believe the deal between General Electric (NYSE:GE) and Baker Hughes (NYSE:BHI) strikes a good balance for GE and BHI, as GE is not selling at the bottom, valuation seems fair for BHI shareholders, and GE management retains control to roll out its digital and service focus across a much broader oil and gas platform.
- Citi views the deal (I, II, III) favorably, as it "reflects deployment of a meaningful portion of the ~$20B in incremental leverage GE had noted as available for transactions over the next few years," but valuation is reasonable and "the deal enhances [GE]’s visibility to EPS growth over the next several years."
- The firm also notes BHI’s weak stock showing, likely given concerns that GE’s "non-cash contribution to the deal (in the form of 37.5% of GE oil and gas) doesn’t provide enough value to Baker Hughes shareholders – we think that concern will diminish over time" given the improved competitive and cost position of the combined company.
- Simmons analyst Bill Herbert cites another likely reason for BHI's 6.3% swoon in today's trade: The new partnership leaves the company more leveraged to deepwater and international projects, which are not as flexible as the U.S. onshore business.
Mon, Oct. 31, 11:28 AM
- Baker Hughes (BHI -2.8%) shares slump to their lowest of the day after jumping by as much as 6% in the premarket, as Jefferies analysts contend that a “quick valuation suggests no premium in the General Electric-Baker Hughes combination without synergies... in other words, the deal excluding synergies appears to be paying current market value."
- Jefferies says it calculated a $24B enterprise value for BHI shareholders in the GE deal based on consensus estimated 2017 EBITDA, suggesting no premium without synergies and assuming no dispositions, adding that a lack of premium is not particularly surprising as the opportunity will be "sold” based on cost and revenue synergies.
- The firm says the $1.6B cost synergies target is surprising based on the $500M in synergies in the Schlumberger-Cameron combination.
Mon, Oct. 31, 10:30 AM
- Baker Hughes (BHI -1%) erases opening gains to trade in the red, while General Electric (GE +0.9%) is higher amid plans to combine their oil and gas operations.
- The new company will be 62.5% owned by GE, with GE Oil & Gas CEO Lorenzo Simonelli serving as President and CEO; GE will fund a special one-time cash dividend of $17.50/share, or $7.4B, to existing BHI shareholders, who will own 37.5% of the new company.
- The deal creates a company with more than $32B in FY 2015 revenue that could cut costs to better compete with rivals such as Schlumberger (SLB -0.9%) to provide equipment and services to oil rigs and wells; the $32B combined revenue places the new company only 8%-9% behind SLB.
- The combined companies expect to generate $1.6B of synergies by 2020, primarily driven by cost savings; GE expects the deal to be accretive to 2018 EPS by $0.04 and 2020 EPS by $0.08.
- Analysts see a high likelihood of the deal's completion given little product overlap outside of the Artificial Lift business and the relatively smaller size of the deal vs. the rejected Halliburton-Baker Hughes (HAL -0.5%) tie-up.
- Moody’s, Fitch and S&P all affirmed GE’s credit ratings with stable outlooks following the announcement.
Mon, Oct. 31, 9:19 AM
Mon, Oct. 31, 6:25 AM
- Banking on a recovery in crude prices, General Electric (NYSE:GE) is merging its oil and gas business with Baker Hughes (NYSE:BHI), creating a large, listed player, that could compete with rivals like Schlumberger (NYSE:SLB).
- GE will own 62.5% of the new company, which will have combined revenue of $32B, while Baker Hughes shareholders will own 37.5% and get a special one-time cash dividend of $17.50 per share after the deal closes (expected in mid-2017).
- GE +1%; BHI +6.6% premarket
Sun, Oct. 30, 10:50 PM
- The roughly $30B deal would see the creation of a new publicly-traded entity comprised of Baker Hughes (NYSE:BHI), GE's oil and gas business, and some cash from GE, reports the WSJ.
- The new company would have more than $25B in annual revenue and thus be of large enough scale to better compete with rivals like Schlumberger (NYSE:SLB).
- The structure of the deal also gives GE control of Baker Hughes without having to shell out for an outright acquisition.
- Previously: WSJ: GE, Baker Hughes could reach deal as soon as next week (Oct. 28)
Fri, Oct. 28, 6:35 PM
- Merger discussions between General Electric (NYSE:GE) and Baker Hughes (NYSE:BHI) are advancing and could result in a deal as early as next week, WSJ reports.
- BHI +1.3% AH after surging 8.4% in today's trade following yesterday's WSJ report on a possible deal in the works; BHI today confirmed through an email to employees that it is in discussions with GE, while GE said late yesterday that the company was pursuing "potential partnerships" with BHI but not an "outright purchase."
- The companies reportedly are negotiating a complicated transaction, perhaps involving merging GE’s oil and gas business with Baker Hughes, which provides oilfield services, and then spinning off the combined business into a new public company.
- Any Reverse Morris Trust deal would allow GE to avoid a big tax bill and allow shareholders to reap any cost savings or other benefits from putting the two businesses together, as well as any upside from a rebound in oil prices.
Fri, Oct. 28, 2:02 PM
Fri, Oct. 28, 9:20 AM