26% Annual Return And Halliburton
Chris DeMuth Jr. • 44 Comments
Chris DeMuth Jr. • 44 Comments
Dec. 11, 2015, 5:56 PM
- Halliburton (NYSE:HAL) officials will visit EU antitrust regulators next week for a state of play meeting and likely will be told about competition worries over its $35B bid for Baker Hughes (NYSE:BHI), Reuters reports.
- The European Commission has been reviewing the proposed combination since Nov. 27 when HAL refiled a request for approval after an earlier application was dismissed as providing insufficient data.
- HAL already has agreed to divest $5.2B in overlapping businesses to quell concerns that the merger would lead to higher prices and less innovation.
- Antitrust authorities in the U.S., Australia and Brazil also are looking into the deal, which has been cleared in Canada, Kazakhstan, South Africa, Colombia and Turkey.
- Earlier: WSJ: Questions still swirl around Halliburton-Baker Hughes deal
Dec. 11, 2015, 11:46 AM
- Investors should buy oil services stocks with exposure to onshore oil production on weakness going forward, Citi analyst Scott Gruber says in "a deliberately early call."
- Onshore oil businesses are set to recover because OPEC does not appear able to meet global demand after 2016, Gruber says, adding that the rally in the companies likely will be "powerful" when it arrives.
- Gruber continues to name Halliburton (HAL -1.7%) and Baker Hughes (BHI -4.7%) as his top picks, but he also believes small and mid-cap names in the sector will rally; he upgrades C&J Energy (CJES -4.8%), Nabors Industries (NBR -3.2%), Patterson-UTI (PTEN -2.2%), Superior Energy (SPN -3.8%) and Weatherford (WFT -6.2%) to Buy from Hold, and raises Helmerich & Payne (HP -2%) and National Oilwell Varco (NOV -1.4%) to Neutral from Sell.
Dec. 11, 2015, 10:38 AM
- Halliburton's (HAL -1.8%) deal to buy Baker Hughes (BHI -4.3%) faces a growing list of antitrust concerns from the U.S. Justice Department and other regulators that could threaten the combination, according to a WSJ report.
- HAL reportedly recently met with the DoJ’s top antitrust official to talk about the deal, but the agency questions whether other companies could buy some assets and become credible rivals to the combined company.
- Also, plunging oil prices have reduced demand for drilling, complicating the companies' efforts to find buyers for assets they would need to sell for the deal to pass regulatory muster.
- "Everything about this deal has turned out to be more complicated and, frankly, more challenging than what was initially envisioned,” says William Herbert, co-head of securities at Simmons & Co.
Dec. 10, 2015, 3:42 PM
- Citigroup analysts expect a nearly 20% drop in spending by E&P companies, which would be bad news for offshore drillers such as Transocean (RIG +1.4%) and National Oilwell Varco (NOV +0.1%), as domestic capex will remain driven by trailing commodity prices and capital raises.
- The firm prefers Halliburton (HAL +0.5%), along with Baker Hughes (BHI -1.5%), and Schlumberger (SLB -0.1%) on franchise quality, exposure to onshore growth longer term and valuations which discount an inability to generate excess returns; it rates all three stocks as Buys.
- At the same time, Citi remains cautious on the offshore levered companies, especially Sell-rated NOV, given downside risk to EPS estimates, and Sell-rated RIG, given displacement risk and debt maturities.
Dec. 10, 2015, 5:06 AM
- Halliburton's (NYSE:HAL) proposed $35B acquisition of rival Baker Hughes (NYSE:BHI) will likely close in 2016 instead of this year as talks with U.S. regulators continue, Halliburton CFO Christian Garcia told a Wells Fargo Energy Symposium.
- Both companies have already agreed to divest $5.2B in overlapping businesses to quell concerns that the merger, which would create the second-largest oilfield services company, would lead to higher prices and less innovation.
Dec. 9, 2015, 3:37 PM
- GE would best satisfy the desire by regulators in both the U.S. and EU for a third provider of integrated oil services contracts," says Seeking Alpha contributor Chris DeMuth, responding to a report the company is near a deal to purchase Halliburton's (HAL +5.2%) drill bits and drilling services divisions.
- A potential deal, he says, means a good chance of Halliburton being spared a massive breakup fee, and then being able to realize the significant cost savings of a merger with Baker Hughes (BHI +7.3%).
Dec. 9, 2015, 2:59 PM
- Halliburton (HAL +4.5%) and Baker Hughes (BHI +6.9%) remain higher after Bloomberg reports that GE (GE +0.8%) is in advanced talks to buy HAL's drill bits and drilling services divisions (earlier).
- Selling both businesses could have fetched as much as $5B combined earlier this year when the units were put on the block, but it is not clear how much the decline in oil prices may have affected their respective market values.
- GE also is exploring bids for other assets that HAL is seeking to unload, including parts of BHI’s completions operations, according to the report.
- While the timeline for closing the merger already has been pushed out to Dec. 15 at the earliest, HAL's acting CFO Christian Garcia says he sees a strong likelihood the deal does not close until sometime in 2016.
Dec. 9, 2015, 2:10 PM| Dec. 9, 2015, 2:10 PM | 9 Comments
Dec. 3, 2015, 3:33 PM
- Baker Hughes (BHI -2.8%) is upgraded to Speculative Buy from Accumulate at Seaport Global on the belief the merger with Halliburton (HAL -3.3%) is a 90% probability, but shares are down anyway as energy companies trade broadly lower.
- The firm says recent news related to the merger indicates the deal continues to progress toward a likely close in late January 2016, while its conversations with HAL indicate that the company to wrap up asset sales before year-end.
- Seaport believes GE is the most likely buyer of the assets, since GE is increasing its energy focus and it has indicated the likelihood of further acquisitions.
Nov. 27, 2015, 12:34 PM
- Halliburton (HAL -0.4%) refiles a request for European Union antitrust approval of its takeover bid for Baker Hughes (BHI +0.3%), four months after the EU rejected an earlier application because of insufficient data.
- The European Commission reportedly will decide by Jan. 12 whether to clear the deal or open a full investigation.
- U.S. antitrust regulators also also looking at the deal, while Canada, Kazakhstan, South Africa and Turkey have approved; Australia's antitrust agency raised concerns last month and will issue its decision on Dec. 17.
Nov. 24, 2015, 5:26 PM
- Susquehanna analysts suspect that international oil exploration will be even weaker than expected, prompting them to reduce estimates for oil services companies Halliburton (NYSE:HAL), Schlumberger (NYSE:SLB), Weatherford International (NYSE:WFT) and Baker Hughes (NYSE:BHI).
- The firm expects activity levels to steadily drift lower in 2016, as national oil companies and international companies slow spending in order to manage cash flows; NOCs generally operate on annual budgets that are not typically subject to much revision, so the larger international operators will be looking for a sustained move higher in oil prices before ramping up spending and activity levels, Susquehanna says.
- The firm's 2016 EPS forecast for SLB slips to $2.50 from $2.78, for WFT falls to a loss of $0.60 from a loss of $0.51, for BHI to a loss of $0.17 from a loss of $0.16, and for HAL to $1.16 from $1.17.
Nov. 24, 2015, 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.
Nov. 6, 2015, 5:30 PM
- Oilfield service companies are in "survival mode," looking to cut costs large and small - from thousands of job cuts to capacity reductions to changing paint colors - WSJ reports.
- Example: Technip (OTCQX:TNHPF) is cutting 6K jobs and using white paint instead of yellow on underwater equipment because adding pigment is more expensive.
- The oil downturn has left even the world's biggest oil services company, Schlumberger (NYSE:SLB), vulnerable; in its Q3 results, the company reported big drops in earnings and revenue.
- Next year could be even worse as producers cut more than $200B in spending this year and next; consult Wood Mackenzie expects only 10 new projects globally to attract investment commitments, which would hit a sector that typically has the capacity to support an average of 40-50 new projects a year.
- Other relevant tickers include: HAL, BHI, CAM, WFT, AMFW, XLE, OIH, XES, IEZ
Nov. 6, 2015, 9:58 AM
- Halliburton (HAL -0.9%) is pushing ahead with plans to sell $7.5B in bonds to finance its $34.6B takeover of Baker Hughes (BHI -1.3%), shrugging off concerns about potential regulatory hurdles.
- HAL says the offering will be issued in five tranches, with a maximum 5% fixed rate for a 30-year note maturing Nov. 15, 2045.
- "They are highly rated and a mega-deal, both of which make them attractive in this environment," says a corporate credit analyst at Janney Montgomery Scott.
- The offering comes shortly after an analyst at Jefferies expressed less confidence in the likelihood that HAL would complete the takeover.
Nov. 4, 2015, 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.
Nov. 3, 2015, 5:09 PM
- Halliburton (NYSE:HAL) declares $0.18/share quarterly dividend, in line with previous.
- Forward yield 1.8%
- Payable Dec. 24; for shareholders of record Dec. 3; ex-div Dec. 1.
Halliburton Co. provides services and products to the energy industry related to the exploration, development, and production of oil and natural gas. The company operates through two segments: Completion & Production and Drilling & Evaluation. The Completion & Production segment delivers... More
Sector: Basic Materials
Industry: Oil & Gas Equipment & Services
Country: United States
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