26% Annual Return And Halliburton
Chris DeMuth Jr. • 44 Comments
Chris DeMuth Jr. • 44 Comments
Yesterday, 10:22 PM
- Raymond James analyst Pavel Molchanov has long been bearish on ExxonMobil (NYSE:XOM), and now he recommends the same advice for current InterOil (NYSE:IOC) shareholders following XOM's buyout: Sell.
- Molchanov says XOM is poorly positioned to take full advantage of a sustained oil price recovery, as the company's structural overweight to refining, chemicals, and (within upstream) non-LNG gas does not directly benefit from rising oil prices; he also says XOM shares already are pricing in long-term oil prices at an above-consensus WTI at $70/bbl.
- For current IOC shareholders, Molchanov says sell the post-buyout shares and use the proceeds to reinvest into any of a wide range of oil-levered stocks such as Halliburton (NYSE:HAL), Hess (NYSE:HES), Marathon Oil (NYSE:MRO) and Whiting Petroleum (NYSE:WLL).
- Molchanov believes the IOC founder's last-ditch attempt to delay XOM’s purchase will not succeed; the next hearing is scheduled for Oct. 31.
Thu, Oct. 20, 6:36 PM
- Schlumberger (NYSE:SLB) -0.4% AH after Q3 earnings beat expectations but fell 82% Y/Y on 17% less revenue and increased expenses related to the Cameron acquisition earlier this year.
- Excluding results from Cameron, SLB says its Q3 land revenue in North America rose 14% Q/Q, attributed to higher drilling and fracturing activity, although pricing improvements were limited as much of the increase in activity was driven by small companies.
- CEO Paul Kibsgaard says SLB foresees improved activity in onshore North American, Middle Eastern and Russian markets next year, but visibility remains limited since customer spending for 2017 is still in the planning process.
- SLB's results come a day after rival Halliburton (NYSE:HAL) posted a small Q3 profit that it attributed to U.S. energy company customers starting to return to drilling this summer.
Thu, Oct. 20, 3:25 PM
- Halliburton (HAL -0.6%) is the pre-eminent way to play the recovery in North American oil services activity, according to DA Davidson, one of at least 10 firms to reiterate Buy ratings for the stock and/or raise its price target following HAL's surprise Q3 profit.
- Davidson sees a disconnect between the U.S. rig count and HAL's lower North American revenues, as smaller operators who are less service intensive were the first to put rigs back to work, and the firm expects service intensity to rise notably in the coming quarters as large operators bump up their capex in 2017.
- BofA Merrill Lynch reiterates its Buy rating and lifts its price target to $56 from $53, believing HAL’s higher North American exposure leaves it well positioned for an anticipated recovery of drilling and completion activity, and noting HAL shares typically outperform peers during an oilfield activity recovery.
- Jefferies says HAL remains its top pick in oilfield services, as it stays focused on exposure to secular growth and believes the company's competitive position globally can help drive rapid margin improvement off the bottom.
Wed, Oct. 19, 2:48 PM
- Halliburton (HAL +5.1%) CEO Dave Lesar says he is determined to raise prices for the company's services to boost profits after seeing North American sales rise for the first time during the oil price downturn.
- "In the U.S., we believe we now have the highest market share we’ve ever had," Lesar said in today's earnings conference call. "At this point, if we have to give some of it back to move margins up, we might take that approach."
- CFO Mark McCollum emphasized the point, saying "We’re definitely going to need some price to get back toward the historic margins that we’ve had in the past. We’re going to be pushing as hard as we can to get back to 20% as quick as we can."
- HAL’s Q3 margin of operating loss was 4.1% but that was better than expected, UBS analyst Angie Sedita says, as "impressive cost controls across all regions led to higher margins across the board with operating income 65% above our forecasts. We view the results as a modest positive for the stock."
Wed, Oct. 19, 8:21 AM
- Halliburton (NYSE:HAL) +0.9% premarket after posting a surprise Q3 profit, as it begins to win back business from oil producers that are beginning to ramp up operations.
- HAL says sales in its primary North American market gained 9% Q/Q to $1.66B, its first North American sales boost since the downturn began in late 2014, and operating results rose by $58M, which represents 41% incremental margins; CEO Dave Lesar cites improving rig count growth and “relentlessly managing costs."
- HAL's sales in the U.S. and Canada had plunged by more than two-thirds during the downturn as customers cut spending; despite the Q/Q improvement, Q3 North American sales still were 33% lower than ay ear ago.
- Lesar, who has talked about a turnaround on the horizon, says HAL is cautious about Q4 activity due to holiday and seasonal weather-related downtimes, but "it does not change our view that things are getting better for us and our customers.”
- Schlumberger (NYSE:SLB) is scheduled to report earnings on Thursday, and Baker Hughes (NYSE:BHI) is expected to report next Tuesday.
Wed, Oct. 19, 6:51 AM
Tue, Oct. 18, 5:30 PM
Tue, Oct. 18, 3:58 PM
- Halliburton (HAL +1.6%) is higher ahead of its earnings report tomorrow, and analysts at DA Davidson expects Q3 results to beat expectations due to the company's market share gains and the recovery of the North American rig count.
- The firm foresees a Q3 loss of $0.05 and revenue of $3.95B vs. Wall Street consensus of a $0.07 loss and $3.9B in revenue, and while "it may take a few more quarters for larger operators (HAL’s core customer base) to adjust capex budgets and increase activity, a slight miss would only add to the trajectory of future earnings."
- Davidson, which has a Buy rating on HAL, expects a significant uptick in the service level intensity “as larger operators gain comfort with the recovery in commodity prices and adjust 2017 capex budgets higher.”
Tue, Oct. 18, 10:45 AM
- Halliburton (NYSE:HAL) reports earnings tomorrow morning. DA Davidson expects a beat (revenue/EBITDA/EPS of $3.95B/$486M/$(0.05) vs. consensus of $3.90B/$469M/$(0.07)).
- "Based on the strength of the recovery in the North American rig count and continued market share gains during the downturn, we expect HAL’s 3Q16 results to largely beat current top and bottom line expectations. Although, it may take a few more quarters for larger operators (HAL’s core customer base) to adjust capex budgets and increase activity, a slight miss would only add to the trajectory of future earnings."
- "We expect the level of service intensity to increase significantly in coming quarters as larger operators gain comfort with the recovery in commodity prices and adjust 2017 capex budgets higher."
- Increases price target to $57 from $54. Implied upside 23%.
Fri, Oct. 14, 1:56 PM
- Halliburton (HAL +0.2%) is added as an Alpha Generator Pick with a $58 price target, raised from $53, at FBR, replacing Independence Contract Drilling (ICD +0.5%).
- FBR, which rates HAL at Outperform, believes that through mid-2017 the company will realize both peer-leading frac pricing increases and continued new technology traction in onshore North America, which point to one of the strongest 2017-18 margin trajectories among pumpers.
- The firm also thinks HAL will reveal accomplishments in its two healthiest activity regions - the Middle East and Russia/Caspian - and will change the narrative for its balance sheet from leverage constraint to acquisition capacity.
- FBR says ICD remains one of the firm's top picks, but sees HAL offering a superior risk-reward profile over the next 6--9 months.
Fri, Oct. 14, 1:11 PM
- U.S. Silica (SLCA -2.1%) and Halliburton (HAL +0.2%) say they moved a record breaking unit train carrying nearly 19K tons of white frac sand from Illinois to Texas.
- The companies say the train - which went along a BNSF rail line from Ottawa, Ill., to HAL’s South Texas Sand Plant in Elmendorf, Tex. - took five days to assemble and was the largest unit shipment of its kind.
- The companies say unit train delivery, leveraging their combined logistical assets, is the most efficient and cost effective way to deliver high volumes of sand in the time constraints required.
Tue, Oct. 11, 12:49 PM
- Norwegian oil service workers have ended a three-week strike that halted operations on 17 drilling rigs after the Industri Energi union won its pay demands with employers.
- The strike at subcontractors to the oil industry included workers at Schlumberger (SLB -0.9%), Halliburton (HAL -1.4%), Baker Hughes (BHI -0.9%) and Oceaneering (OII -0.8%).
- An extended strike had threatened closure of Statoil's (STO -2.1%) Melkoeya liquefied natural gas plant and Royal Dutch Shell's (RDS.A, RDS.B) Nyhamna gas processing plant.
Wed, Sep. 28, 3:19 PM
- The energy sector (XLE +4%) bursts to the top of the leaderboard after OPEC announces a planned production cut to 32.5M bbl/day at the informal OPEC meeting in Algiers.
- Among individual energy stocks: XOM +3.8%, CVX +2.7%, RDS.A +2.8%, BP +3.4%, TOT +2.4%, PBR +4.5%, COP +6.4%, MRO +8%, MPC +1.4%, PSX +1.9%, VLO -0.1%, EOG +6.2%, PXD +6.4%, OXY +4.5%, DVN +7.9%, CLR +8.3%, APA +6.2%, NOV +8.1%, SLB +3.3%, BHI +3.6%, HAL +4.3%, KMI +3.4%, ENB +2.6%, EPD +1.9%, ETP +2.9%.
Wed, Sep. 21, 10:21 AM
- More than 300 Norwegian oil service workers are on strike after wage talks broke down, hitting operations of subcontractors to the country's oil and gas industry including Schlumberger (SLB +1%), Halliburton (HAL +2.3%), Baker Hughes (BHI +2%) and Oceaneering (OII +1.5%).
- The conflict will force oil companies to halt drilling of some wells on Norway's continental shelf and later could cut into the country's production of ~2M bbl/day of oil, condensate and natural gas liquids; state-controlled Statoil (STO +0.8%) is Norway's largest oil firm.
- Brent crude recently was 1.6% higher at $46.58/bbl and WTI had jumped 2.1% to $45, sparked by the strike and API data showing a surprise drop in U.S. crude inventories.
- ETFs: USO, OIL, UWTI, UCO, DWTI, SCO, BNO, DBO, DTO, USL, DNO, OLO, SZO, OLEM
Wed, Sep. 7, 3:03 AM
- Don't expect too much out of Q3 oil services results, Credit Suisse says. "While an impressive move off the bottom, the U.S. horizontal rig count is still only 31% of its 2014 average. Not going down anymore is fabulous. But it doesn’t translate into doing well very quickly."
- Still, CS says investors should be more aggressive in buying stocks that miss earnings estimates.
- Firm notes that the focus on efficiency continues. "Sand has replaced land rigs as the under-utilized fixed-cost-base leveraged play on the recovery." Recommends SLCA and HCLP.
- Says that technology and a more efficient client base makes HAL the top “demographic” play over SLB in the near term.
- "BHI and WFT are self-help stories in different stages of improvement, but both have reasons to be in energy portfolios. Manufacturing is challenged with its focus on deepwater, which drives FET as our top pick in the group."
Wed, Aug. 31, 6:45 PM
- Halliburton (NYSE:HAL) remains Evercore ISI's “North American Winner” among oilfield services stocks and sees shares hitting $60 in "the not-too-distant future," citing the management team’s "relentless pursuit of efficiency and aggressive positioning for the upcycle."
- The firm believes HAL is best positioned in the group to benefit from the unfolding increase in oilfield services activity in North America, as it remains markedly more levered to North America than competitors.
- Once the recovery strengthens, North American activity will react the quickest and the strongest, which Evercore says should allow HAL to enjoy higher company-wide revenue growth and margin expansion than its peers.
- Yesterday, Guggenheim analysts suggested selling HAL in favor of Schlumberger (NYSE:SLB), mostly on SLB's discounted valuation.