National Oilwell: Premier E&P Service Company At Bargain Valuation
Thomas Lott • 17 Comments
Thomas Lott • 17 Comments
Oct. 27, 2015, 5:30 PM
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Sep. 4, 2015, 12:23 PM
- Sclumberger’s (NYSE:SLB) purchase of Cameron International (NYSE:CAM) should easily close, with optimism growing that Halliburton's (NYSE:HAL) bid for Baker Hughes (NYSE:BHI) also will close, and the deals mean more oil company M&A is on the way, FBR Capital analyst Thomas Curran believes.
- The wave of heavyweight deals likely is not over yet, Curran says, seeing Weatherford (NYSE:WFT) as the highest probability takeout with the broadest set of plausible strategic suitors; National Oilwell Varco (NYSE:NOV) is viewed as having a high likelihood of entering into a big deal, although probably as an acquirer, and FMC Tech (NYSE:FTI) could puruse a full combination with Technip, its 50/50% JV partner in Forsys Subsea.
Aug. 31, 2015, 7:32 AM
- National Oilwell Varco (NYSE:NOV) names Jose Bayardo as its new senior VP and CFO, succeeding interim CFO Scott Duff.
- Prior to joining NOV, Bayardo served as senior VP for resource and business development at Continental Resources, and once was an investment banker at J.P. Morgan.
- Duff will continue as NOV's corporate controller and chief accounting officer.
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. 14, 2015, 5:56 PM
- Berkshire Hathaway (BRK.A, BRK.B) disclosed in its latest 13F filing that it sold off its shares in Phillips 66 (NYSE:PSX) and National Oilwell Varco (NYSE:NOV) during Q2, as it continued to cut its positions in energy companies.
- Meanwhile, BRK kept unchanged its stakes in its “Big Four” holdings American Express (NYSE:AXP), Coca Cola (NYSE:KO), Wells Fargo (NYSE:WFC) and IBM.
- Warren Buffett seemed to hint during a CNBC interview this week that BRK may have built up its IBM stake in the current quarter, saying "I love it when it goes down" when asked whether he was concerned about the stock’s recent performance.
- Buffett’s only new stake in the quarter was a 20M-share investment in auto paint maker Axalta Coating Systems (NYSE:AXTA), which BRK bought from Carlyle Group.
Aug. 13, 2015, 7:09 AM
- National Oilwell Varco (NYSE:NOV) declares $0.46/share quarterly dividend, in line with previous.
- Forward yield 4.49%
- Payable Sept. 25; for shareholders of record Sept. 11; ex-div Sept. 9.
Aug. 5, 2015, 2:57 PM
- National Oilwell Varco (NOV -0.3%) is downgraded to Hold from Buy at Argus, which says NOV’s customers are likely to reduce spending on capital equipment during a period of low oil prices, which is expected to continue over the next 12-18 months.
- Argus says NOV is heavily exposed to the deepwater market at a time when E&P companies are favoring short-cycle, fast-payback onshore projects and are facing challenges from an oversupply of deepwater rigs.
- The firm also expects NOV's backlog to decline as orders slow, and notes that the share price historically has been closely correlated with the backlog.
- NOV's Q2 orders in its rig systems segment fell 77% Y/Y, which lowered the segment backlog by 40% to $9B, with 91% of the current backlog in the offshore market, which Argus expects to face near-term pressure in the near term.
- The firm foresees further declines in the backlog over the next 12 months due to slow order activity, and notes that the NOV share price historically has been closely correlated with the company’s backlog.
Aug. 3, 2015, 2:39 PM
- Texas-based oilfield service companies National Oilwell Varco (NOV -1.9%) and Cal Dive (OTCPK:CDVIQ) International are cutting a combined 276 jobs in the state this month, according to state regulators.
- NOV says its wellbore technologies unit is closing a facility in Willis, Tex., over the next few months, laying off 150 employees starting in mid-August, while Cal Dive will close two facilities and cut 126 employees beginning Aug. 31.
- Oil industry recruiter Swift Worldwide estimates worldwide oilfield layoffs have reached ~176K so far, up from its previous estimate of 150K in mid-June.
Jul. 28, 2015, 11:47 AM
- National Oilwell Varco (NOV +1.8%) says it expects to continue making acquisitions, viewing the low oil price environment as a buyer’s market with a lot of potential targets.
- NOV already has closed three acquisitions YTD and is in talks with a half-dozen more companies, CEO/Chairman Clay Williams said in this morning's earnings conference call.
- NOV reported big Y/Y drops in Q2 earnings and revenues, but both results topped expectations.
- Q2 ending backlog for capital equipment orders for the rig systems segment was $9.03B, down 13% from Q1 and down 41% Y/Y, while new orders during the quarter totaled $313M.
Jul. 28, 2015, 7:07 AM
- National Oilwell Varco (NYSE:NOV): Q2 EPS of $0.77 beats by $0.13.
- Revenue of $3.91B (-25.7% Y/Y) beats by $50M.
Jul. 27, 2015, 5:30 PM
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Jul. 17, 2015, 2:39 PM
- National Oilwell Varco (NOV -0.9%) is downgraded to Sell from Neutral with a $35 price target, cut from $50, at UBS, which believes orders for ultra-deepwater and jackup rigs will remain at anemic levels for the next 3-5 years, and likely longer.
- The firm says the offshore drilling industry still has three years of significant newbuild rig capacity entering the market, and is not likely to see a major offshore rig construction and replacement cycle over the next 7-10 years.
- UBS issues the Sell rating even as it views NOV as best in class on several fronts, including management, operations, balance sheet and financial discipline.
- Earlier: Oil drillers under heavy pressure
Jul. 17, 2015, 11:32 AM
- Offshore drillers are significantly underperforming the broader market following cautious commentary from Schlumberger (SLB -0.1%) despite its Q2 earnings beat, a contract termination and an analyst downgrade.
- On its earnings call this morning, SLB said it expects little improvement in pricing levels in the near future and declines in activity for offshore drillers, while land rigs provide a more attractive opportunity and better margins.
- For its Q3, SLB foresees a further 5%-6% decline in Q/Q revenue as well as lower EPS, and says the $0.77 consensus is a realistic number.
- Yesterday, ConocoPhillips (COP -1.8%) said it plans to cut future deepwater exploration spending, particularly in its operated Gulf of Mexico program; in light of the decision, COP is terminating a contract for an Ensco (ESV -4.9%) deepwater drill ship.
- Also, UBS today downgraded National Oilwell Varco (NOV -1.5%) to Sell from Neutral.
- SDRL -6.4%, RIG -4.7%, RDC -6%, DO -3.3%, ATW -4.2%, HP -1.2%, PTEN -1.2%, PACD -5.7%.
Jun. 17, 2015, 7:48 AM
- National Oilwell Varco (NYSE:NOV) says it will cut 1,500 jobs from its Norwegian workforce, or a bit less than a third of its staff there, by the end of this year as low oil prices have led to reduced spending by oil companies and lower sales of new equipment; 900 permanent jobs and 600 contract workers will be cut.
- Statoil, Norway’s dominant oil company, said yesterday that it would cut up to 1,500 permanent positions and 525 consultants from a total Norwegian workforce of more than 20K.
- NOV's Norwegian arm contributed ~4% of the company’s $21.4B in total revenue last year.
May 21, 2015, 9:30 AM
- Alongside Goldman's list of 50 stocks appearing most as top holdings at hedge funds is its list of the 50 top shorts.
- New additions this quarter: Baxter Intl (NYSE:BAX), UPS, Marriott (NASDAQ:MAR), NextEra (NYSE:NEE), Ford (NYSE:F), National Oilwell Varco (NYSE:NOV), McDonald's (NYSE:MCD), M&T Bank (NYSE:MTB), CenturyLink (NYSE:CTL), Amgen (NASDAQ:AMGN), Pioneer Natural (NYSE:PXD), Duke Energy (NYSE:DUK), Seagate (NASDAQ:STX), AbbVie (NYSE:ABBV), Cisco (NASDAQ:CSCO).
- The full list (in order of $ value of short interest): AT&T (NYSE:T), Disney (NYSE:DIS), IBM, Verizon (NYSE:VZ), Intel (NASDAQ:INTC), Kinder Morgan (NYSE:KMI), Exxon (NYSE:XOM), Pfizer (NYSE:PFE), J&J (NYSE:JNJ), Deere (NYSE:DE), Caterpillar (NYSE:CAT), Exelon (NYSE:EXC), GE, Boeing (NYSE:BA), Halliburton (NYSE:HAL), Fox (NASDAQ:FOXA), Comcast (NASDAQ:CMCSA), UTX, Regeneron (NASDAQ:REGN), Merck (NYSE:MRK), salesforce.com (NYSE:CRM), AbbVie (ABBV), Conoco (NYSE:COP), Wal-Mart (NYSE:WMT), Eli Lilly (NYSE:LLY), Celgene (NASDAQ:CELG), Schlumberger (NYSE:SLB), AutoZone (NYSE:AZO), Wells Fargo (NYSE:WFC), Emerson (NYSE:EMR), McDonald's (MCD), Reynolds (NYSE:RAI), Target (NYSE:TGT), Accenture (NYSE:ACN), Coca-Cola (NYSE:KO).
May 18, 2015, 3:03 PM
- Goldman's sees the S&P 500 hitting a mid-year high of 2,150 by mid-year, but fading to 2,100 by year-end after the Fed hikes rates. Its 12-month forecast of 2,125 stands against the current level of 2,130.
- With appreciation returns expected to be nil, Goldman suggests having a look at its dividend growth portfolio - a sector-neutral basket of 50 stocks. They have a median yield of 2.5% and are expected to boost payouts by 16% this year and 12% in 2016. The group's P-E ratio is 15 vs. 17.3 for the S&P 500.
- The ten highest-yielding additions: Harley-Davidson (NYSE:HOG) - with a 2.3% yield, Home Depot (NYSE:HD) - 2.1%, Dr. Pepper Snapple (NYSE:DPS) - 2.5%, National Oilwell Varco (NYSE:NOV) - 3.6%, Regions Financial (NYSE:RF) - 2.3%, Baxter International (NYSE:BAX) - 3.1%, Cummins (NYSE:CMI) - 2.4%, Seagate Technology (NASDAQ:STX) - 3.9%, International Paper (NYSE:IP) - 3.1%, AES Corp (NYSE:AES) - 3%.
- Looking over a ten-year horizon, Goldman expects dividends to account for 46% of the S&P 500's 5% annualized return, up from 20% during the current bull market which started in 2009.
- ETFs: DVY, SCHD, ADX, SDOG, DLN, DHS, FDL, DTD, FVD, DVYL, SDYL
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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