National Oilwell Varco (NOV +0.5%) is poised to grow rapidly in the next few years, according to a weekend Barron's report. "You're looking at a $100 stock in two years," one analyst says, and NOV should trade at a premium to smaller firms such as CAM and FTI in light of its strong earnings visibility, 6%-8% free-cash-flow yield and prime market position.
Conditions are ripe for large oilfield service and equipment companies - think HAL, SLB, NOV, CAM, FTI - to continue to snap up smaller firms and assets, Barclays says, citing new regulations encouraging high-specification equipment, operator demand for equipment capable of increasing efficiencies, and the ongoing build-out in offshore markets. (also)
Stock investors have reacted in a subdued way to recent deals (I, II, III) for oilfield services firms that should boost the earnings of buyers, including National Oilwell Varco (NOV), FMC Tech (FTI) and Chicago Bridge & Iron (CBI), Tudor Pickering analysts say. Most of the targets, such as Pure Energy, have “healthy” exposure to North America, which analysts say investors "still view skeptically."
FMC Tech (FTI) agrees to acquire Canadian oilfield services company Pure Energy Services (PUEYF.PK) for $285M in cash. The C$11/share price values Pure at a premium of 39% over its Friday closing price in Toronto. FTI says the acquisition will help it expand its services business.
Shares of oilfield equipment maker FMC Technologies (FTI +3.9%) surge after Q2 profit margins on the company's subsea sales increase more than expected to 11.6%. FTI will garner $4B-$5B in subsea-related orders this year as the market for underwater drilling equipment strengthens, CEO John Gremp says.
FMC Technologies (FTI) signs a $200M agreement with Statoil (STO) to manufacture and supply subsea production equipment to support the Gullfaks South field development in the North Sea. The contract includes supplying seven subsea production trees, seven wellhead systems and two integrated protection structures with manifolds.
As natural gas prices tumble another 5% and North American oil service spending slips to its lowest level in six quarters, J.P. Morgan's David Anderson predicts "heightening risk and few catalysts" for the service market until late summer. He sees a return to balance by late 2012; meanwhile, he likes NOV, DRC, FTI and FET due to their role in providing capital equipment instead of drilling.
FMC Technologies Inc is a provider of technology solutions for the energy industry. It designs, manufactures and services subsea production and processing systems, surface wellhead production systems, measurement solutions and marine loading systems.