Yesterday, 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%.
Mon, Aug. 3, 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.
Tue, Jul. 28, 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.
Fri, Jul. 17, 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%.
Mon, May 11, 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.
Wed, Feb. 4, 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.
Tue, Feb. 3, 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.
Wed, Jan. 28, 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.
Mon, Jan. 5, 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.
Nov. 3, 2014, 12:24 PM
- National Oilwell Varco (NOV -1.5%) is lower after shares are downgraded at both Credit Suisse and Cowen.
- Credit Suisse cites a "double whammy" of onshore and offshore market slowdowns and a lack of near-term catalysts in cutting its rating to Neutral from Outperform and its price target to $77 from $93, adding that NOV is "making the transition from a growth stock to a total return stock in a market with some near-term headwinds."
- Cowen cuts the stock to Market Perform from Outperform with a $73 target, down from $81, against a backdrop of lower global E&P spending in 2015, flat spending in 2016, and minimal offshore rig awards over the next 2-3 years; however, it believes the downside is limited, in part due to NOV's $3B share buyback program.
Oct. 30, 2014, 10:59 AM
- National Oilwell Varco (NOV -2.3%) CEO Clay Williams says he would not be surprised to see the number of active drilling rigs fall modestly in 2015 in the wake of the recent drop in oil prices.
- Williams tells analysts in today's earnings conference call that lower prices historically have not impacted activity until three or four months have passed as oil and gas producers drill out their rig contracts.
- The CEO says NOV is cautiously optimistic about 2015 but bullish on 2016, believing that even if the market faces a downturn next year, the company’s $14.3B backlog of equipment orders and its diverse products should see it through tougher times.
- NOV reported better than expected Q3 earnings, as it saw higher demand for rig equipment and wellbore technologies amid a surge of fracking activity in west Texas and elsewhere.
Oct. 17, 2014, 10:17 AM
- Oil services (OIH +4%) stocks rip higher at the open following a strong earnings report from Schlumberger (SLB +7.4%) and as oil prices stabilize.
- Tumbling crude prices haven’t shaken the faith of at least two of the top providers of drilling and production services: SLB CEO Paal Kibsgaard describes the drop as “fear of short-term oversupply” and says the company is not changing a long-term view that its earnings will almost double from last year’s level by 2017, while Baker Hughes (BHI +4.7%) CEO Martin Craighead says his company's customers don't believe crude prices will stay low.
- HAL +5.5%, SPN +5.2%, WFT +5.1%, CAM +2.1%, NOV +2%, FTI +1.8%, DRQ +1.4%.
Oct. 16, 2014, 7:55 AM
- Baker Hughes (NYSE:BHI) -10.8% premarket after Q3 earnings rose 10% Y/Y but missed estimates, as political tensions in Libya and Iraq plus a sharp fall in drilling activity in the Gulf of Mexico weighed on margins.
- Q3 pre-tax profit margins in its operations in Europe, Africa and the Russia Caspian region fell to 8% from 17% in the year-ago quarter.
- Revenue of the North American segment, BHI's largest geographic business by revenue, rose 11% to $3.2B, and climbed 6% in the Middle East and Asia Pacific region, 8% in the Europe, Africa and Russia Caspian segment, and 3% in Latin America.
- Oil services stocks (NYSEARCA:OIH) to watch: HAL, SLB. SPN, NOV, CAM, FTI, DRQ.
Aug. 7, 2014, 4:12 PM
- Dresser-Rand (DRC +8.6%) spiked into close following a Bloomberg report that it hired Morgan Stanley to prepare for possible takeover bids from companies including Siemens (OTCPK:SIEGY).
- While DRC isn’t actively pursuing a sale, the company is said to have retained Stanley after potential suitors expressed interest; the report says CEO Vincent Volpe Jr. may not even want a sale and is seeking defense advice from the banker.
- Siemens reportedly has been evaluating a bid for DRC since at least 2011; analysts also have mentioned GE, Cameron International (NYSE:CAM) and National Oilwell Varco (NYSE:NOV) as potential buyers in the past.
Jul. 30, 2014, 3:59 PM
- National Oilwell Varco (NOV -1.9%) slides after Jefferies lowers its rating to Hold from Buy with a $91 price target, down from $95, saying that much of the intrinsic value is already priced into the stock.
- Jefferies cuts its 2014 EPS estimate to $5.80 from $6.45 due to expectations of weakness in deepwater activity, as it suspects "at best tepid deepwater orders through 2015 as part of the industry's review/reset of deepwater activity, which poses risk to 2016-17 revenue."
- The firm also notes that NOV is trading at 14.4x its 2014 EPS estimate and 12.9x 2015 estimate vs. a prior cycle average forward 12-month P/E of 17.2x.
NOV vs. ETF Alternatives
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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