Oceaneering Holding Up Better Than Most
Stephen Simpson, CFA
Stephen Simpson, CFA
Oceaneering: A Chance To Feed On Mr. Market's Despair
Wed, Feb. 10, 5:06 PM
- Oceaneering (NYSE:OII): Q4 EPS of $0.58 in-line.
- Revenue of $722.07M (-21.4% Y/Y) beats by $26.08M.
- Shares +1.89% AH.
Wed, Feb. 3, 3:11 PM
- Oceaneering International (OII -1.5%) says BP will terminate its contract on a vessel contracted to work offshore of Angola eight months early.
- The contract for the Bourbon Oceanteam 101 was scheduled to extend through the end of January 2017, but BP now plans to terminate the deal at the end of May 2016.
- OII expects BP will reimburse costs associated for the early termination, but does not reveal any specific amount.
- OII expects a second chartered vessel, Ocean Intervention III, to continue as contracted with BP offshore Angola through January 2017.
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.
Sep. 1, 2015, 2:23 PM
- Oceaneering (OII -6.4%) says in prepared remarks ahead of a Morgan Stanley conference presentation says its H2 outlook by business segment may have been "a bit optimistic."
- "Expected work is being postponed and the summer 'call out' market and rig contract renewals are weaker than anticipated. However, we currently believe our earnings can still be within our guidance range as lower unallocated expenses will somewhat mitigate the shortfall from operations," says OII exec Marvin Migura.
- Says it intends "to continue paying a quarterly cash dividend, which is currently $0.27/share."
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%.
Jul. 27, 2015, 3:39 PM
- Cameron (CAM -0.8%) and Oceaneering (OII -1.9%) are upgraded to Buy from Accumulate, with respective $58 and $60 price targets, at Global Hunter, even as it downgrades land-based drilling services provider Patterson-UTI.
- The firm says its CAM upgrade is based on the company's margin resilience, boosting leadership and leverage to an eventual North American recovery, and expects margins to continue to hold up relatively well in its largest subsea and drilling segments due to CAM's focus on improving execution even prior to the downturn.
- OII shares have shed more than 30% since early April as WTI has drifted below $50/bbl, a level the firm believes is not sustainable; OII eventually should rally with oil prices, the firm says, preferring to be buyers when the screen is red.
Apr. 22, 2015, 5:35 PM
Apr. 21, 2015, 3:44 PM
- Oceaneering (OII -4.1%) is downgraded to Underperform from Hold with a $49 price target, down from $52, at Jefferies, citing a weak order outlook and the recent recovery in the stock price.
- The firm is concerned about major project sanctioning over the next two or more years, while saying the regional deepwater cost curve appears attractive mainly in the Gulf of Mexico and Brazil's Santos basin.
- Jefferies also believes the industry "could sanction as few as five large projects in 2015 and 2016 vs. 47 deepwater projects that are currently in construction, yet the resolution of cost woes in the industry appears to be a slow process."
Feb. 12, 2015, 3:59 PM
- Oceaneering (OII -8.4%) tumbled to 52-week lows before recovering slightly, after reporting record Q4 earnings but spooking investors with downside guidance for the current quarter and year.
- OII now estimates Q4 EPS of $0.58-$0.62, far below analyst consensus expectations for $0.90, and sees FY 2015 EPS of $3.10-$3.50, lowered from prior company guidance of $4.10-$4.50 and below the $3.96 consensus.
- OII says all of its oilfield business segments will have lower operating income in 2015 than in 2014 because of reduced demand and pricing for many of its services and products amid the slowdown in deepwater activity attributable to lower crude oil prices.
Jan. 12, 2015, 10:38 AM
- Goldman Sachs reiterates its cautious view on oil services companies (OIH -4.2%) as it cuts its outlook for crude prices, now forecasting a 30% cut in U.S. E&P capex and 15% globally and sharply lowering earnings estimates and target prices for several companies in the space.
- Goldman downgrades Schlumberger (SLB -5%) to Neutral from Buy with a $76 price target, down from $90, expecting SLB’s earnings to come under pressure and noting that SLB has high exposure to Russia (nearly 5% of total revenues) and will be hurt by the recent steep fall in the ruble.
- The firm removes Oceaneering (OII -3.9%) from its Conviction Buy list and cuts its price target to $64 from $74, now expecting a reduced deepwater rig count in 2015 vs. previous expectations of a flat rig count, which should hurt OII’s Remotely Operated Vehicles business.
Dec. 18, 2014, 9:59 AM
- RBC recommends increasing weightings and exposure to oil service stocks (OIH +2.5%) heading into 2015, as it says oil prices will start to improve in H2 of next year and that oil service stocks typically discount this move by 6-9 months.
- Down cycles such as 2000-02 and 2008-09 suggest North American land drillers and service companies provide the best returns off business cycle lows, RBC says as it expects a similar dynamic this time.
- RBC upgrades Key Energy (KEG +24.6%) and Superior Energy (SPN +7.5%) to Outperform, and downgrades FMC Tech (FTI +1.8%), Franks (FI +4.9%), Oceaneering (OII +0.2%) and Oil States (OIS +2.3%) to Sector Perform; the firm also says since 1985 three of the top five performing stocks off lows have been Patterson-UTI (PTEN +6.6%), Precision Drilling (PDS +4%) and Nabors (NBR +7.2%).
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.
Oct. 27, 2014, 8:55 AM
- Goldman Sachs lowers its ratings on the oil services sector (NYSEARCA:OIH) to Cautious from Attractive and downgrades several specific stocks as it cuts its 2015 oil price forecast.
- U.S. land activity will suffer the biggest impact of the lower price deck, Goldman says, with customer capital spending expected to decline 6% next year vs. its prior outlook for a 9% increase; as a result, the firm now forecasts the horizontal U.S. rig count to fall 7%, or ~200 rigs, over the next 12 months.
- Goldman downgrades Parsley Energy (PE -3.8% premarket), Diamond Offshore (DO -1.5%), Laredo Petroleum (LPI -9%) and Basic Energy Services (BAS -6.2%) to Sell with sharply lower price targets; Patterson-UTI (NASDAQ:PTEN), Pioneer Energy (NYSE:PES) and Emerge Energy (NYSE:EMES) are cut to Neutral.
- The firm adds Oceaneering (OII -0.3%) to its Conviction Buy list; it also removes Halliburton (HAL -1.5%) from the list but maintains its Buy rating on the stock.
May 27, 2014, 12:27 PM
- North Atlantic Drilling's (NADL +8.9%) deal with Rosneft (RNFTF) is particularly good news for Seadrill (SDRL +1.5%), Cowen's J.B. Lowe says, as SDRL gains a foothold into the Russian market, adds significant backlog during the market downturn and monetizes part of its North Atlantic Drilling investment; also, a cash infusion is a positive given growing concern over SDRL’s ability to pay its dividend.
- Morgan Stanley’s Ole Slorer thinks the deal is good for the entire industry, seeing the reduction in near term rig availability as an important turning point for the entire offshore driller space; it also expects further contract signings in Brazil and west Africa to help reverse current beaten down sentiment.
- Lowe likes Transocean (RIG +1.6%) among drillers in the North Sea, where the number of rigs will drop as NADL's rigs head to Russia, while Slorer recommends laggards with limited business in Brazil, such as Helix Energy (HLX), Oceaneering (OII) and Frank’s International (FI).
Apr. 24, 2014, 12:15 PM
- Oceaneering (OII +3.4%) moves higher after Q1 earnings and revenues beat expectations on the back of strength in its subsea products division, which saw higher demand for undersea hardware and the umbilicals line with an $894M end-of-quarter backlog.
- OII added 14 new ROV systems to its operations during Q1, and increased utilization to 86% from 83%.
- OII expects all of its business segments to continue growth and post higher income in 2014 than in 2013; sees Q2 EPS of $0.97-$1.01 vs. analyst consensus estimate of $1.04, and FY 2014 EPS of 3.90-$4.10 vs. $4.03 consensus.
Sep. 23, 2013, 9:58 AM
- Oceaneeering (OII -2.2%) is downgraded to Neutral from Buy with an $81 price target, lowered from $92, at Stifel Nicolaus, which says it can't find a catalyst to move the stock higher.
- The firm believes OII should benefit from deepwater secular growth but is concerned whether the remotely operated vehicles segment, which comprises nearly half of OII's EBIT, can sustain the unit growth necessary to produce 20%-plus EPS growth in 2015 and beyond.
- Wall Street's high expectations for OII, which assume 20% EPS growth through 2015, set up the shares to disappoint.
Oceaneering International, Inc. provides engineered services and products primarily to the offshore oil and gas industry. The company provides remotely operated vehicles, built-to-order specialty subsea hardware, engineering and project management, subsea intervention services, including manned... More
Sector: Basic Materials
Industry: Oil & Gas Equipment & Services
Country: United States
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