C&J Energy (CJES) +8% AH and Nabors Industries (NBR) +6.2% after the companies agree to merge, creating a diversified completion and production services provider.
NBR will receive total consideration of $2.86B in cash and stock, comprised of ~62.5M CJES shares and $940M in cash; the combined company will retain the C&J Energy name and management team.
CJES expects the deal to be accretive to EPS during the first full year of combined operations, as it will leverage identifiable cost and revenue synergies through the achievement of operational efficiencies and capex savings.
C&J Energy (CJES +2.3%) is upgraded to Buy from Neutral with a $35 price target, up from $22, at Global Hunter based on the company's leverage to an acceleration in North American onshore unconventional development.
Global Hunter see CJES as well positioned after it decided two quarters ago to ramp its capacity ahead of a potential North American upturn; the company has recently built high-quality fleets it can package in multi-service operator arrangements and is able to add capacity rapidly in-house at a ~20% discount to market prices.
C&J Energy (CJES -2.7%) is downgraded to Neutral from Buy with a $22 price target (from $28) at Goldman Sachs, which cites increased E&P focus on cost controls resulting in more commodity-type pressure pumping jobs than those suited to CJES' competitive strengths, resulting in lower than forecast equipment utilization.
Halliburton (HAL -3.7%) shares sink after CFO Mark McCollum warns a drop in activity in its North American home market means Q3 revenue will decline, and lower pricing will knock as much as three percentage points off Q3 profit margins. Analyst consensus had expected a ~2% rise in Q/Q revenues. Also: SLB -2.1%, BHI -3.5%, CJES -3.9%.
C&J Energy (CJES +3%) is initiated with a Buy rating and $26 target price at Global Hunter, which believes it is "reasonably well positioned" to weather North American onshore market conditions in 2012-13. Term commitments and recent contract renewals from large E&P customers "speak to the legitimacy of CJES' growing franchise," the firm says.
Halliburton (HAL -2.1%) and Schlumberger (SLB -1.9%) join oilfield services competitor Baker Hughes (BHI -5.9%) in the red after the BHI profit warning. Morgan Stanley chips in, cutting HAL to equalweight as the battle for market share threatens margins. OIH -2.1%.
Shares of C&J Energy Services (CJES) +9.7% premarket after announcing its Q3 revenue grew 26% Y/Y, primarily due to timely delivery and deployment of the company’s fifth hydraulic fracturing fleet. (PR)
C&J Energy Services Inc provides hydraulic fracturing, coiled tubing, well stimulation and cased-hole wireline services. The Company also manufactures refurbishes & repairs equipment's & provides oilfield parts & supplies to own & third-party customers.