Thu, Feb. 26, 6:38 PM
- Credit Suisse says the recent rally in oil prices and in oilfield services stocks (NYSEARCA:OIH) is a classic dead cat bounce, and that as soon as U.S. storage gets full - and it is close - crude prices will fall, bringing expectations and stocks down with it.
- The firm says its sector outlook is increasingly negative as companies report increased pricing pressure, a record drop in the activity barometer of the rig count, and offshore rigs and projects confronting headwinds that could take a couple of years to fix.
- Relevant stocks: SLB, HAL, BHI, CAM, HLX, SPN, NOV, FET, DRQ, FTI, OIS
Fri, Feb. 20, 8:15 AM
- Eurasia Drilling says it is delaying a deal to sell a stake in the company to Schlumberger (NYSE:SLB), pending approval from Russia's Federal Anti-Monopoly Service, and will not occur during Q1 as previously expected.
- SLB said last month it planned to buy a 45.65% stake in Eurasia for ~$1.7B, potentially paving the way for it to become the sole owner of the Russian oilfield services company.
Thu, Feb. 19, 6:30 PM
- Saudi Aramco, whose prolific production has contributed to the drop in oil prices, is starting to feel the pain from its country’s decision to keep pumping and is now asking contractors for steep discounts in an effort to cut costs, according to a WSJ report.
- The Saudi oil company reportedly summoned oil services companies including Schlumberger (NYSE:SLB), Halliburton (NYSE:HAL) and Baker Hughes (NYSE:BHI) to ask for discounts of up to 20% on certain services such as well testing procedures; the companies do a combined $6B/year in business with Aramco.
- The Saudi company also is said to have delayed plans to build a $2B clean fuels plant and held up deepwater oil and gas exploration and drilling activities in the Red Sea because their profitability is now in question.
- Aramco is considering slashing E&P spending to $30B/year from $40B while oil prices remain low, industry sources say.
Wed, Feb. 18, 3:15 PM
- RBC analysts think it's time to position for an oil recovery by buying oilfield services stocks such as Schlumberger (SLB -1.2%), Patterson-UTI (PTEN -0.4%), Nabors Industries (NBR +2.5%) and Precision Drilling (PDS +0.4%).
- The firm believes oil prices will bottom in H1 2015, improves during H2 and averages at least $75/bbl in 2016, and sees U.S. land drillers and intensive service companies providing the best returns in the early phases of cycle recovery.
- RBC notes that three of the top five performing stocks in the sector off the lows since 1997 have been PTEN, PDS and NBR; the firm considers SLB and NBR as best ideas, while PTEN is a small-cap best idea.
Tue, Feb. 17, 10:19 AM
- U.S. and European suppliers to the oil industry are still able to seek work in Russia’s Arctic despite sanctions designed to limit their involvement because the rules do not apply to international subsidiaries, according to a Bloomberg report.
- Schlumberger’s (SLB -0.6%) Russian unit bid in a December tender to supply drilling fluids to an offshore Arctic project operated by Gazprom Neft, and in the prior month, Baker Hughes’ (BHI -0.4%) local unit and a Panamanian unit of Schlumberger offered drilling services at the same field.
- Neither company has been accused of breaking any laws, and none of the bids was successful, but the use of subsidiaries to legally skirt sanctions will raise questions about the effectiveness of measures imposed to punish Russia.
Tue, Jan. 20, 11:49 AM
- The timing for Schlumberger’s (SLB -0.7%) acquisition of 45.6% in Russia’s largest drilling company is considered unusual, given the sanctions imposed on Russia, but Eurasia's shares have fallen by more than 60% over the past year after top customers Lukoil and Gazprom came under sanctions.
- The move signals that SLB is “taking an opportunity to strengthen its presence in the regional market,” the Otrkitie brokerage says, adding that it views the $22/share valuation of the deal as fair.
- SLB stock price targets are cut at several firms, including Argus and Jefferies, to reflect expectations for reduced spending by E&P customers, although the company generally is seen as well positioned in 2015 despite current industry headwinds.
Tue, Jan. 20, 4:39 AM
- Schlumberger (NYSE:SLB) is acquiring a 45.65% stake in Russia's largest drilling company, Eurasia Drilling, for $1.7B, and will have the option to buy the rest of the company three years after the deal closes.
- Eurasia will delist its depositary receipts from the London Stock Exchange as part of the agreement.
Fri, Jan. 16, 3:27 PM
- Schlumberger (SLB +5.8%) pushes to highs of the day following Q4 results that were strong operationally once the big writedowns are stripped away, with continued strength driven by record activity in North America, Middle East and Asia.
- In today's earnings conference call, CEO Paal Kibsgaard says crude oil’s collapse is putting heat on SLB’s prices for drilling services and fracking in North America, but the upside is that shale producers now want better technologies to squeeze more oil out of the wells they have already drilled.
- Next-generation fracturing fluids SLB introduced early last year have so far grown in sales at 4x the rate of its 2011 iteration - which was a fast grower on its own - as falling oil prices force oil companies to adopt new technologies faster and more broadly.
- On the pending merger with Baker Hughes (NYSE:BHI), the CEO says the deal could mean a glass ceiling on SLB’s market share in some countries will fall away.
Thu, Jan. 15, 5:19 PM
- Schlumberger (NYSE:SLB) +0.6% AH after reporting Q4 earnings fell 82% Y/Y as it wrote down $1.7B in assets, but adjusted earnings beat Wall Street estimates.
- SLB says it plans to cut 9,000 employees, or ~7.5% of its workforce around the globe, and recorded a related $296M charge.
- Q4 results were driven by growth in North America, where revenue rose 16% to a record $16.15B; international revenue rose 4% to $32.1B, as strength in the Middle East and Asia was partially offset by a significant decline in revenue from Russia.
- Expects 2015 capex of ~$3B, down from $4B last year.
- SLB reported earlier that it raised its dividend 25% to $0.50/share.
Thu, Jan. 15, 4:17 PM
Thu, Jan. 15, 1:01 PM
Wed, Jan. 14, 5:35 PM
Mon, Jan. 12, 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.
Sat, Jan. 10, 8:25 AM
- Kinder Morgan (NYSE:KMI) tops Credit Suisse's list of its nine favorite energy and utility stocks to own for 2015, believing KMI’s recent MLP acquisitions will lower the company’s cost of capital and open the door for double-digit dividend growth and additional potential acquisitions.
- Noble Corp. (NYSE:NE) is the top pick among offshore drillers, despite the fact that analysts don’t believe the inflection point in the drilling down-cycle is coming until at least 2016; fulfilling the firm's $30 price target would mean nearly 90% upside.
- Also recommended: SUNE, EXC, RDS.A, RDS.B, TSO, DVN, PDCE, SLB.
- SandRidge Energy (NYSE:SD) is one of Credit Suisse's five energy and utility stocks to avoid despite an upbeat quarterly report, believing the risk associated with SD’s extremely high leverage likely will lead to significant capex cuts, thus limiting production growth and cash flows.
- The firm also would avoid CVRR, SFY, YGE and SO.
Fri, Jan. 9, 6:56 PM
- Wall Street is bracing for a 20% decline in energy companies’ Q4 earnings, with deeper losses expected later when companies report Q1 and Q2 earnings.
- Schlumberger (NYSE:SLB) on Thursday will be the first among oilfield services companies to report, while other companies, such as Caterpillar (NYSE:CAT), which reports on Jan. 27, also may report pain from falling oil prices.
- Among the giant oil companies, ConocoPhillips (NYSE:COP) is expected report its Q4 on Jan. 29 with analyst consensus EPS of $0.89 vs. $1.40 a year earlier, Chevron (NYSE:CVX) reports on Jan. 30 and analysts foresee EPS of $1.78 vs. $2.57 a year ago, and Exxon (NYSE:XOM) reports on Feb. 2 and is seen reporting $1.41 vs. $1.91 last year.
- Perhaps more than earnings numbers, investors will want to hear about belt-tightening measures at energy companies; more than 40 so far have announced their 2015 capex plans, with the average budget calling for a reduction in spending of more than 30%.
- Expect to hear the term “ex-energy” to describe overall earnings outside energy companies, the same way “ex-financials” was handy a few years back.
Fri, Jan. 9, 2:58 PM
- Barclays begins coverage of Halliburton (HAL -0.9%) as its top pick in the oilfield services and equipment sector at the same time as it views the overall sector as fairly valued.
- The firm predicts HAL will gain market share during the current downturn since it charges the cheapest prices in North America in its group, and believes HAL’s pending acquisition of Baker Hughes (NYSE:BHI) should enable it to catch up with Schlumberger (NYSE:SLB) in terms of operational aptitude and stock multiple.
- KeyBanc is less enthusiastic on HAL, rating the stock a Hold and saying the company faces "immediate risks" related to market challenges, market share erosion, and sales of assets as conditions of the BHI deal.
- Earlier: Barclays says North America E&P spending could drop 30% or more
SLB vs. ETF Alternatives
Schlumberger NV is a supplier of technology, integrated project management and information solutions to customers working in the oil and gas industry. Its business segments areReservoir Characterization Group, Drilling Group and Production Group.
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