Tue, Nov. 24, 10:30 AM
- Halliburton (HAL +1.8%) will do “whatever is necessary" to win antitrust approval to buy Baker Hughes (BHI +1.1%), including selling additional assets to satisfy regulators, according to ValueAct Capital Management, which owns stakes in both companies.
- Bloomberg reports the activist fund said in a letter to its investors that, after discussions with the two oil field services companies, it is confident the deal is on track and will close.
- The letter may help ease concerns about the deal’s prospects among investors, who have grown increasingly worried that the tie-up could be in trouble with regulators.
Wed, Nov. 4, 11:48 AM
- Baker Hughes (BHI -4.1%) plunges after Jefferies says it has less confidence of a successful close to Halliburton's (HAL -2.1%) proposed acquisition of the company, as EU regulators are beginning to "ask a lot of questions" about the proposed deal, which could indicate concerns that the deal would reduce competition at the upper end of the energy services market.
- Jefferies' Brad Handler says BHI shares would fall 25%-30% if the deal falls throughm but HAL would face limited downside risk; the analyst cuts his price target on BHI to $62 from $68 but keeps a Buy rating, while keeping a $47 price target and Buy rating on HAL.
Thu, Oct. 22, 12:58 PM
- Baker Hughes (BHI +2.7%) is upgraded to Buy from Hold with a $78 price target at Argus, which says currently undervalued shares offer an inexpensive way to gain exposure to the new post-merger Halliburton (HAL +3.8%).
- Argus says the current implied takeover price is $62 per BHI share, based on the initial offer of 1.12 HAL shares plus $19 in cash for each share of BHI; as such, if the merger were completed today, BHI investors would net ~$7.60/share.
- The firm also notes HAL's strong incentive to make any necessary divestitures, as it would have to pay BHI a $3.5B breakup fee if the deal falls through.
- UBS reiterates its Buy rating and $70 price target for BHI following better than expected Q3 earnings.
Thu, Oct. 22, 12:26 PM
- Weatherford International (WFT +10.6%) will not try to buy assets divested by Halliburton (HAL +3.3%) and Baker Hughes (BHI +2.6%), CEO Bernard Duroc-Danner said in its earnings conference call today, putting to rest questions about its involvement in the bidding process.
- The CEO said WFT was interested in HAL’s Sperry Drilling business, which has been placed on the market as HAL and Baker Hughes seek regulatory approval for their $35B merger, but that while WFT believed that the economics of Sperry were strong, the company “could not get over the cost of capital."
- Instead of chasing divested assets, Duroc-Danner said WFT will continue to focus on making the business more efficient and focusing on its strengths.
- HAL said Monday it was making progress on marketing assets it has targeted for sale, and has entered the negotiation phase for the first slate of announced divestitures, including Sperry Drilling.
Wed, Oct. 21, 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.
Tue, Sep. 22, 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.
Mon, Sep. 21, 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.
Fri, Aug. 28, 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.
Wed, Aug. 26, 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%.
Wed, Jul. 22, 12:51 PM
- Halliburton’s (HAL -3.2%) takeover of Baker Hughes (BHI -7.6%) is facing resistance from U.S. Justice Department officials who are concerned the deal could hurt competition, Bloomberg reports, sending shares tumbling.
- Although HAL has proposed selling some assets to other companies, antitrust enforcers reportedly are not convinced its plan would restore sufficient competition.
- The DoJ's antitrust division is positioned to carry out a legal challenge if it decides to try to halt the deal, and has assigned veteran litigator John Read to oversee the review, according to the report.
Tue, Jul. 21, 10:58 AM
- Regulatory approval for Halliburton's (HAL +4.4%) proposed acquisition of Baker Hughes (BHI +3.2%) is a "high probability event," and HAL's buyback potential post-acquisition looks significant, Citigroup's Scott Gruber says.
- The analyst estimates $5.00 pro forma EPS for HAL in 2018, suggesting 90% upside potential for shares over the next three years, also noting that applying a 16x earnings multiple yields a $78 share price.
- Gruber keeps a Buy rating on HAL with a $54 price target.
Mon, Jul. 20, 8:23 AM
- Halliburton (NYSE:HAL) +3.1% premarket after beating Q2 earnings and revenue expectations despite a 93% Y/Y profit drop.
- HAL says Q2 revenue of $5.9B fell 16% Q/Q while outperforming a 26% drop in the worldwide rig count; operating income fell due to lower activity levels for all product lines, exacerbated by pricing declines, primarily in North America.
- Q2 revenue In North America fell 25% Q/Q, significantly better than the 40% decline in average rig count; pricing erosion continued during the quarter, but decremental margins were less severe than previous downturns, which HAL says shows its cost reduction initiatives are helping to offset current market challenges.
- HAL says it has received the initial rounds of bids on previously announced sales related to the Baker Hughes (NYSE:BHI) acquisition, is "pleased with the prices and level of interest," remains "fully committed" to closing the deal, and expects to achieve cost synergies of nearly $2B.
Thu, Apr. 16, 5:27 PM
- Schlumberger (NYSE:SLB) +2.5% AH after Q1 earnings fell sharply Y/Y but beat Wall Street estimates, and the company said it would cut another 2K jobs.
- SLB now plans to cut another 11K jobs, leading to a total workforce reduction of ~15% compared to the peak from last year's Q3, after laying off 9K employees late last year; SLB recorded a related $390M pretax charge in Q1.
- SLB had warned that its North American operations would be hardest hit by the plunge in oil prices, and its Q1 North America revenue fell 13% to $3.2B; most of SLB’s operations are international, where Q1 revenue fell 8% to $6.9B.
- CEO Paal Kibsgaard says the company believes "a recovery in U.S. land drilling activity will be pushed out in time, as the inventory of uncompleted wells builds and as the re-fracturing market expands, [but] a recovery in activity will fall well short of reaching previous levels, hence extending the period of pricing weakness."
- SLB also says it is cutting its 2015 capex guidance to $2.5B from an earlier estimate of $3B and down from $4B spent last year.
- S&P analyst Stewart Glickman says it is hard to see where the company and its rivals can cut without slicing into muscle.
- SLB's two largest competitors, Halliburton (NYSE:HAL) and Baker Hughes (NYSE:BHI) - which agreed to merge last year - are scheduled to report earnings next week.
Tue, Jan. 20, 8:37 AM
- Baker Hughes (NYSE:BHI) +1.6% premarket after easily beating Q4 earnings estimates but warning of a difficult 2015, similar to concerns discussed today in Halliburton's earnings report.
- "While market demand ended up being more resilient in the fourth quarter than many had predicted, the recent declines seen in rig counts will clearly affect results in 2015," BHI CEO Martin Craighead says.
- Q4 revenue at BHI's North American segment jumped 20.4% to $3.3B, Middle East/Asia Pacific revenue rose 13%, Europe/Africa/Russia added 5%, and Latin America revenue slipped 2%.
- BHI says it realized its best pressure pumping margins in three years and hit its goal of mid-teens operating margins in North America; international results exceeded forecasts, driven by a surge in year-end product sales.
- Says it will lay off 7,000 employees, mostly in the current quarter, and is reviewing its facilities for possible closures; expects to book a one-time charge of $160M-$185M.
- On Friday, activist investor ValueAct Capital Management reported a 5.1% stake in BHI, an unusual move since the company is being bought by Halliburton; ValueAct began buying the week after the deal was announced in November.
Fri, Jan. 16, 3:27 PM
- Schlumberger (SLB +5.8%) pushes to highs of the day following Q4 results that were strong operationally once the big writedowns are stripped away, with continued strength driven by record activity in North America, Middle East and Asia.
- In today's earnings conference call, CEO Paal Kibsgaard says crude oil’s collapse is putting heat on SLB’s prices for drilling services and fracking in North America, but the upside is that shale producers now want better technologies to squeeze more oil out of the wells they have already drilled.
- Next-generation fracturing fluids SLB introduced early last year have so far grown in sales at 4x the rate of its 2011 iteration - which was a fast grower on its own - as falling oil prices force oil companies to adopt new technologies faster and more broadly.
- On the pending merger with Baker Hughes (NYSE:BHI), the CEO says the deal could mean a glass ceiling on SLB’s market share in some countries will fall away.
Dec. 18, 2014, 11:43 AM
- RBC upgrades Baker Hughes (BHI -1.2%) to Outperform from Sector Perform with a $72 price target, but the praise isn't earning the gains enjoyed by Key Energy (KEG +38.1%) and Superior Energy (SPN +4.5%) after the firm's similar upgrades.
- RBC likes BHI in its belief that sentiment will start to shift on North American land names as the oil price improves throughout 2015; BHI and Halliburton both generate ~50% of their operating income in North America, the firm notes.
- BHI continues to trade at a discount to the deal price of its merger with HAL, and should trade closer to the deal price throughout the year assuming U.S. government hurdles are met.
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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