National Oilwell: Premier E&P Service Company At Bargain Valuation
Thomas Lott • 17 Comments
Thomas Lott • 17 Comments
Fri, Feb. 26, 6:51 AM
Mon, Feb. 8, 6:58 PM
- The oil industry nightmare will not end anytime soon, and "it seems clear that the oversupply of drilling capacity may persist well into 2017 and possibly beyond," Diamond Offshore (NYSE:DO) CEO Marc Edwards said in today's earnings conference call.
- "Deepwater drilling will recover... What I can't tell you is when," the CEO said; in the meantime, DO is not only eliminating its dividend, but also considering mergers and/or acquisitions, buying distressed assets, and other crisis measures.
- Analysts like DO's new service agreement with GE, which is expected to help lower idle time for rigs on hire - crucial for drillers struggling to lease out offshore rigs and cut costs as oil and gas producers scale back spending.
- DO loses up to $500K of revenue each day a rig is down, while the oil and gas producing customer also loses as much money, Edwards says, calling downtime the industry's "Achilles' heel."
- Evercore ISI analyst James West says the service model will create a much more visible stream of cash flow for equipment providers compared with the cash flow from selling equipment, "which is very cyclical and very lumpy."
- Among companies that could adopt a similar model are offshore rig providers such as Noble Corp. (NYSE:NE), which could tie up with oilfield equipment manufacturers such as National Oilwell Varco (NYSE:NOV) and Cameron (NYSE:CAM), analysts say.
Wed, Feb. 3, 10:28 AM
- National Oilwell Varco (NOV -13.7%) plunges 14% in early trading after posting a big Q4 earnings miss on a 52% Y/Y drop in revenue; the company recorded a $1.52B unadjusted net loss and racked up $1.63B in pre-tax impairment charges.
- CEO Clay Williams says the “lower-for-longer” period of low oil prices eventually will push demand to grow and provide the foundation for an eventual recovery, but NOV is not expecting a recovery in 2016, including a challenging H1 with more reduced revenues.
- NOV's rig systems unit generated revenues of $1B, down 32% Q/Q and 60% Y/Y; rig aftermarket revenues totaled $569M, flat Q/Q and down 33% Y/Y; wellbore technologies produced revenues of $757M, down 9% Q/Q and 50% Y/Y.
- The completion and production solutions unit generated revenues of $746M, down 7% Q/Q and 44% Y/Y; the backlog for capital equipment orders for the unit was $969M at the end of Q4, down 17% from Q3 and down 46% from the year-ago quarter, and new orders during Q4 totaled $272M.
- Tudor Pickering Holt calls the results “much worse than we envisioned,” adding that the “most challenging quarter in some time reflects the harsh reality” of E&P companies slamming the brakes on spending.
Wed, Feb. 3, 9:19 AM
Wed, Feb. 3, 6:51 AM
- National Oilwell Varco (NYSE:NOV): Q4 EPS of $0.23 misses by $0.21.
- Revenue of $2.72B (-52.4% Y/Y) misses by $320M.
Tue, Feb. 2, 5:30 PM
Fri, Jan. 22, 8:28 AM
- Moody's places 120 oil and gas companies on review for a downgrade, in a sweeping global review that includes all major regions and ranges from the world's top global majors such as Royal Dutch Shell (RDS.A, RDS.B), Total (NYSE:TOT) and BP to 69 U.S. E&P and services firms.
- Warning of "a substantial risk that prices may recover much more slowly over the medium term than many companies expect, as well as a risk that prices might fall further," Moody's now sees both WTI and Brent crude averaging $33/bbl this year, a $7 cut for WTI and a $10 reduction for Brent from its previous forecast.
- The ratings firm also places 55 mining companies on review for downgrade as they battle a slump in commodity prices.
- Among the companies placed on review are Alcoa (NYSE:AA), Schlumberger (NYSE:SLB), Chesapeake Energy (NYSE:CHK), Transocean (NYSE:RIG), Statoil (NYSE:STO), Vale (NYSE:VALE), Goldcorp (NYSE:GG), National Oilwell Varco (NYSE:NOV) and Diamond Offshore (NYSE:DO).
- ETFs: XLE, VDE, ERX, OIH, XOP, ERY, FCG, DIG, GASL, DUG, BGR, XES, IYE, IEO, IEZ, FENY, PXE, PXI, FIF, PXJ, NDP, RYE, FXN, DDG
Tue, Jan. 5, 3:57 PM
- C&J Energy Services (CJES -14.3%) and National Oilwell Varco (NOV -2.8%) are sharply lower after Keybanc downgraded the stocks to Sector Weight from Overweight, as the oil services industry emerges from a difficult year of cost-cutting and downsizing.
- "If global demand for oil and gas drilling services continues to slide, additional cost-saving actions will be taken," the firm says.
- Keybanc upgraded Halliburton (HAL -0.2%) and merger partner Baker Hughes (BHI -2.8%) to Overweight from Sector Weight, but both stocks look to finish lower.
Dec. 14, 2015, 12:38 PM
- National Oilwell Varco (NOV -0.1%) should buy Weatherford (WFT -1.8%), as WFT fits NOV's criteria of helping realize meaningful cost synergies and/or operational improvements, helping shift exposure to land from offshore, and enhancing its portfolio of onshore completion and production offerings, says Thomas Curran of FBR.
- NOV would need to convince WFT to a 50% premium all cash payment for the deal, and would be funded via debt, which would leave the combined entity with a steep but manageable debt-to-total capital ratio, the analyst says.
- Curran has maintained an Outperform rating on NOV with a price target of $55.
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. 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. 7, 2015, 7:58 AM
- National Oilwell Varco (NYSE:NOV) says it is cutting another 900 jobs in Norway, bringing total cuts this year to 2,400, or roughly half its workforce in the country.
- NOV blames the downsizing on reduced spending by oil companies and lower sales of new equipment; oil companies operating in Norway expect their E&P investments to drop to NOK171B ($19.83B) next year from a record-high NOK214B in 2014, according to Statistics Norway.
Nov. 30, 2015, 2:23 PM
- The "lower for longer" consensus on crude oil prices is overly conservative, and prices will begin bouncing back next year, Guggenheim analysts say as they upgrade the oil services sector to Buy and see plenty of upside for the major players given current market conditions.
- Guggenheim is calling for oil prices to return to $100/bbl by 2018, and sees 10% upside across the board for oil services stocks in the next year resulting from the group's unique exposure to crude prices.
- Within the group, the firm prefers Rowan (RDC +1.8%) and Atwood Oceanics (ATW +1.6%), as their backlogs should help reduce near-term risk, RDC has no newbuild commitments and ATW is finalizing a contract in Brazil for one of its two uncontracted rigs, utilization in the Middle East (NYSE:RDC) and Australia (NYSE:ATW) should be resilient on a relative basis, and both have fleets that make them more interesting M&A candidates.
- Upgraded to Buy from Neutral: CAM, RIG, NE, OII, PACD, DO, ESV, CLB, OIS, HP, NBR, CRR, NOV, DRQ, FI, PTEN, SSE, FTI, CJES, FET, SPN.
Nov. 12, 2015, 6:52 AM
- National Oilwell Varco (NYSE:NOV) declares $0.46/share quarterly dividend, in line with previous.
- Forward yield 4.87%
- Payable Dec. 18; for shareholders of record Dec. 4; ex-div Dec. 2.
Oct. 28, 2015, 11:49 AM
- National Oilwell Varco (NOV +1.8%) is higher after reporting better than expected Q3 earnings even as revenues drop 40% Y/Y and warning of weaker drilling activity in Q4.
- NOV says its backlog at the end of Q3 totaled $8.02B for its rig systems segment and $1.17B for the completion and production solutions segment.
- CEO Clay Williams says NOV is positioning itself to make acquisitions, believing sellers are likely to reduce their expectations by 2016, as pain in the oilfield services industry shakes out struggling companies.
Oct. 28, 2015, 7:03 AM
- National Oilwell Varco (NYSE:NOV): Q3 EPS of $0.61 beats by $0.05.
- Revenue of $3.31B (-40.8% Y/Y) misses by $160M.
National Oilwell Varco, Inc. provides equipment and components that are used in oil and gas drilling and production operations, oilfield services, and supply chain integration services to the upstream oil and gas industry. The company operates through the following segments: Rig Systems, Rig... More
Sector: Basic Materials
Industry: Oil & Gas Equipment & Services
Country: United States
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