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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
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. 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.
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.
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.
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. 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. 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%.
May 11, 2015, 11:49 AM
- It's time to "take profits and... a summer vacation" in onshore oil services stocks such as National Oilwell Varco (NOV -2.8%), Weatherford International (WFT -2.7%), Patterson-UTI Energy (PTEN -3.7%) and RPC (RES -4%), Citigroup's Scott Gruber says.
- The onshore service stocks are discounting at least 400 horizontal rigs returning to service, yet quick-to-market tight oil means supply concerns likely will manifest as soon as the rig count begins to rally, the firm says.
- Citi downgrades NOV to Sell from Neutral given risk of backlog cancellations, continued EPS compression and valuation, and believes a recovery multiple is not warranted for the stock until backlog growth resumes; the firm also cuts RPC to Sell, reiterates its Sell rating on Helmerich & Payne (HP -2%), and lowers WFT and PTEN to Neutral from Buy.
Feb. 4, 2015, 3:47 PM
- National Oilwell Varco (NOV -3.6%) is slammed by at least three analyst downgrades and multiple price target reductions, as Q4 results show a declining order book that the analysts believe will remain challenged throughout 2015.
- In cutting shares to Neutral from Accumulate with a $49 price target, down from $74, Global Hunter foresees minimal newbuild orders for both onshore and offshore rigs until oil prices have rebounded substantially and rig counts have begun to recover, which it does not expect in the next few quarters.
- Credit Suisse lowers its share price target to a Street-low $40, as guidance of ~$7B in revenue out of backlog this year against an outlook of less than $2B in orders this year and the same in 2016 points to a dramatic drop in rig systems revenues.
Feb. 3, 2015, 9:17 AM
- National Oilwell Varco (NYSE:NOV) -2.3% premarket after posting better than expected Q4 earnings on strong growth in its wellbore technologies and productions segments, but warning of weakness this year tied to the decline in oil prices.
- "Looking into 2015 we face a very challenging market. Our customers are sharply reducing their oilfield activity and expenditures," CEO Clay Williams says.
- Sales in the rig segment, NOV's biggest, grew 7% to $2.56B, while rig-aftermarket revenue rose 12% to $850M; wellbore technologies revenue grew 12% to $1.53B, while sales in the completion and productions solutions business gained 15% to $1.33B.
- But in a clear sign of the industry downturn, the backlog for NOV's biggest division, rig systems, fell 13% Y/Y and 17% Q/Q to $12.5B; the backlog for completion and production equipment rose 9% to $1.78B.
Jan. 28, 2015, 12:33 PM
- National Oilwell Varco (NOV -4.9%) hits a 52-week low after shares are downgraded to Underperform from Neutral with a $43 price target, down from $60, at Credit Suisse, which says NOV appears to be the most negatively impacted stock by many negative data points coming through its 2-3 year outlook.
- The firm says NOV is an exceptionally well-managed company, but believes the rig systems business - 44% of estimated 2014 EBIT - will be hurt by an expected lack of new deepwater rig orders through 2016 and its exposure to slowing North American and international activity due to lower oil prices.
Jan. 5, 2015, 12:18 PM
- Energy stocks severely underperform the broader market, with the sector -4.2% vs. the S&P 500's -1.4%, as U.S. oil prices briefly slip below $50/bbl for the first time since April 2009; Nymex crude recently was -4.4% at $50.37, while Brent crude -5.9% at $53.08.
- Among the day's biggest losers: DNR -9%, RIG -7.6%, NBR -4.8%, CHK -5.9%, SDRL -9.1%, SD -12.3%, NOV -5.9%, PSX -6.2%, APA -5.9%, DVN -4.4%, EOG -6%, SU -5.2%, OXY -4.2%, APC -8.7%, PWE -9%, ECA -5.5%, MRO -5.3%.
- Global oil majors, which have been seen as less vulnerable to falling oil prices, are posting big losses: XOM -2.7%, COP -4.5%, CVX -3.8%, BP -5.8%, RDS.A -4.6%, TOT -6.5%.
- ETFs: USO, XLE, OIL, UCO, ERX, VDE, OIH, SCO, XOP, ERY, FCG, DIG, PBW, BNO, GASL, DTO, DBO, DUG, IYE, XES, IEO, QCLN, IEZ, UWTI, PXE, USL, PXI, FENY, DWTI, PXJ, DNO, PSCE, RYE, SZO, PUW, FXN, OLO, DDG, HECO, TWTI, OLEM
Nov. 14, 2014, 12:48 PM
- Oil services companies are mostly higher as Halliburton (HAL +1.7%) is indeed in talks to buy Baker Hughes (BHI +0.5%), a deal that would provide a jolt to oilfield services companies contending with falling oil prices: SLB +0.4%, OIS +1.2%, SPN +2.3%, CAM +0.2%, FTI -0.3%, NOV -0.6%.
- Sterne Agee analyst Stephen Gengaro calls a potential HAL-BHI combo a “HAL of a Frac-ing Deal," seeing several positives for HAL including strengthening its relatively weak position in artificial lift and production chemicals which are critical to enhancing HAL’s mature field strategy, enabling it to leverage its unparalleled U.S. pressure pumping logistics chain to enhance the efficiency of BHI’s operations, and providing the opportunity for significant cost savings which likely would total $600M-$750M or more.
- While antitrust concerns could force some divestitures, Gengaro does not believe it would prevent a deal from happening.
- Other potentially attractive M&A targets among oil services companies could include Dril-Quip (DRQ +0.7%), Frank’s International (FI +2.6%) and Oceaneering (OII -0.2%), Simmons & Co. says.
National Oilwell Varco Inc is a provider in the design, manufacture and sale of equipment and components used in oil and gas drilling, completion and production operations, and the provision of oilfield services to the upstream oil and gas industry.
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