Surprisingly Strong Margins Bode Well For Cameron
Stephen Simpson, CFA
Stephen Simpson, CFA
Cameron's Parting Shot Before The Deluge
Stephen Simpson, CFA
Stephen Simpson, CFA
Sep. 3, 2015, 9:52 AM
- Schlumberger (SLB +0.9%) is upgraded to Buy from Neutral at Citigroup, which says its strategy and ability to deliver will allow the stock to outperform with an average 15% annual upside over three years.
- SLB's "superior strategy, delivery platform, technology development and execution will facilitate a resumption to excess returns in 2017," analyst Scott Gruber writes.
- However, Gruber believes consensus earnings forecasts for SLB could prove too high, since he says they do not take into account the recent drop in oil prices; thus he cuts its target price for SLB to $87 from $93.
- Citi also upgrades Cameron (CAM +0.5%) to Buy from Neutral, seeing a 95% probability of CAM's acquisition by SLB being completed successfully.
Sep. 2, 2015, 6:47 PM
- Analysts at RBC Capital add five names - CNQ, OTCPK:DTNOY, WES, WFT and EXH - to the firm's Global Energy Best Ideas List, and removes five names.
- Canadian Natural Resources is well positioned to benefit from a rebound in crude oil as the largest heavy oil producer in Canada; DNO's near-term outlook is "set to be dominated" by regular oil payments from Kurdistan; Western Gas Partners is a defensive play given its solid but with ssignificant growth potential; Weatherford is the "next man up" on the M&A front; and Exterran Holdings is viewed favorably ahead of the proposed spin transaction.
- Removed from the RBC list: CAM, MIC, PDS, OTC:SECYF, OTCPK:AOIFF.
Aug. 31, 2015, 9:15 AM
- Singapore's Keppel Offshore & Marine agrees to acquire Cameron International's (NYSE:CAM) offshore rig business for $100M.
- The business consists of CAM's LeTourneau jackup rig designs, its rig kit business and aftermarket services; Keppel says the LeTourneau designs have been popular with certain market segments and will help it expand its suite of jackup rig offerings.
- CAM is set to be acquired by Schlumberger in a $14.8B deal.
Aug. 28, 2015, 2:56 PM
- Schlumberger (SLB +2.7%) is offering more than $66 in cash and stock per share while takeover target Cameron International’s (CAM +2.5%) private market value may be only $63, according to Gabelli analysts who lower their recommendation on CAM to Hold from Buy.
- The firm says arbitrageurs can earn a respectable ~10% annualized return on the deal, assuming a successful close by the end of Q1 2016 and given the current $3.62 deal spread.
- However, the firm believes the deal makes strategic sense for both companies, combining SLB’s subsurface and wellbore expertise with the largest surface technology and second-largest subsea equipment manufacturer, and expects the deal will close with minimal regulatory scrutiny.
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, 6:32 PM
- J.P. Morgan analyst Sean Meakim sees no recovery for oil services companies before 2017 at the earliest, anticipating a protracted period of fits and starts in activity before the sector’s overcapitalization is sufficiently eased through consolidation and attrition.
- Although the next 4-6 quarters likely will be extremely painful for the sector, Meakim thinks the more pain endured in the near term means more gain will be available for the survivors in the eventual next up-cycle.
- JPM's top picks in the group include Halliburton (NYSE:HAL), Schlumberger (NYSE:SLB), Cameron (NYSE:CAM), MRC Global (NYSE:MRC) and Superior Energy Services (NYSE:SPN), while its top Underweights include Ensco (NYSE:ESV), Noble (NYSE:NE) and Transocean (NYSE:RIG).
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. 26, 2015, 12:45 PM
Aug. 26, 2015, 9:14 AM
Aug. 26, 2015, 6:32 AM
- Schlumberger (NYSE:SLB) is acquiring oilfield equipment maker Cameron International (NYSE:CAM) in a stock and cash transaction valued at $14.8B.
- Under the terms of the agreement, Cameron shareholders will receive 0.716 shares of Schlumberger common stock and a cash payment of $14.44 for each share held.
- The deal represents a 56.3% premium to Cameron's closing stock price on Tuesday.
- CAM +41.4% premarket
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%.
- ETFs: XLE, VDE, ERX, OIH, XOP, ERY, DIG, DUG, BGR, XES, IYE, IEO, IEZ, FENY, PXE, PXI, FIF, PXJ, NDP, RYE, FXN, DDG
Jul. 27, 2015, 3:39 PM
- Cameron (CAM -0.8%) and Oceaneering (OII -1.9%) are upgraded to Buy from Accumulate, with respective $58 and $60 price targets, at Global Hunter, even as it downgrades land-based drilling services provider Patterson-UTI.
- The firm says its CAM upgrade is based on the company's margin resilience, boosting leadership and leverage to an eventual North American recovery, and expects margins to continue to hold up relatively well in its largest subsea and drilling segments due to CAM's focus on improving execution even prior to the downturn.
- OII shares have shed more than 30% since early April as WTI has drifted below $50/bbl, a level the firm believes is not sustainable; OII eventually should rally with oil prices, the firm says, preferring to be buyers when the screen is red.
Jul. 23, 2015, 7:43 AM
- Cameron (NYSE:CAM): Q2 EPS of $0.83 beats by $0.06.
- Revenue of $2.22B (-13.6% Y/Y) beats by $40M.
Jul. 22, 2015, 5:30 PM
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Jul. 13, 2015, 8:47 AM
- Norwegian offshore engineer Subsea 7 (OTCPK:SUBCY) says it is forming an alliance with Cameron (NYSE:CAM) and Schlumberger (NYSE:SLB) JV OneSubsea to collaborate on selected projects, focussing on subsea production systems and subsea umbilicals, risers and flowlines system solutions.
- Subsea 7 says the alliance will bring together its experience and technology in seabed to surface engineering, construction and life-of-field services with OneSubsea's unique reservoir expertise and state-of-the-art subsea production and processing systems technologies.
Jul. 10, 2015, 3:41 PM
- Cameron (CAM +1%) is upgraded to Outperform from Sector Perform with a $65 price target, raised from $55, at RBC, which sees upside to consensus 2016-17 expectations as the company's diversified business mix is performing better than the market expected.
- RBC sees the strong Surface and Subsea businesses allowing CAM to generate healthy free cash flow through 2017; on the order front, the firm thinks Q1 will be a bottom in total orders and historically the stock trades with order trends.
- RBC expects to see tangible integrated OneSubsea awards in H2 and ultimately still believes the offering will increase recovery rates and lead to higher margins for CAM.
Cameron International Corp. designs, manufactures, markets and services equipment used by the oil and gas industry and industrial manufacturing companies. It provides flow equipment products, systems and services to worldwide oil, gas and process industries. The company operates through the... More
Sector: Basic Materials
Industry: Oil & Gas Equipment & Services
Country: United States
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