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
Fri, Jan. 9, 7:55 AM
- Oil and gas companies could cut E&P spending in North America by 30% or more this year if U.S. crude oil prices continue to trade at $50-$60/bbl, Barclays estimates on the basis of a survey of 225 oil and gas companies.
- The firm expects U.S. onshore rig count to fall by 500 rigs over the year to ~1,250 rigs by the end of 2015.
- Barclays says this is only the seventh time in the 30-year history of its survey that global spending is estimated to fall, adding that spending rose by more than 10% the following year after almost every decline.
- In the oilfield services group (NYSEARCA:OIH), the firm initiates Halliburton (NYSE:HAL), Baker Hughes (NYSE:BHI), National Oilwell Varco (NYSE:NOV) and FMC Tech (NYSE:FTI) at Overweight, and Forum Energy Tech (NYSE:FET) and Dril-Quip (NYSE:DRQ) at Underweight; Schlumberger (NYSE:SLB), Cameron (NYSE:CAM), Weatherford (NYSE:WFT) and Superior Energy (NYSE:SPN) are started at Equal Weight.
- ETFs: XLE, ERX, VDE, XOP, ERY, DIG, DUG, IYE, XES, IEO, IEZ, PXE, FENY, PXJ, RYE, FXN, DDG
Wed, Jan. 7, 2:55 PM
- Credit Suisse's James Wicklund suggests avoiding oilfield services stocks, as the firm cuts its earnings estimates on Schlumberger (SLB -0.7%), Weatherford (WFT -0.7%) and Cameron International (CAM +0.9%) by 20% or more.
- The analyst expects the rig count to decline every week for the next three months and fall by another 400-plus rigs; it also believes downside earnings revisions have just started, and the conference calls will be ugly, meaning sector sentiment is bound to get worse.
- "While prices typically bottom in Q1, the duration and magnitude of the slowdown required to balance the markets will require at least a full year, so prices could skip along that bottom for an extended period," Wicklund writes.
Tue, Jan. 6, 12:32 PM
- Oppenheimer’s James Schumm thinks investors should buy high-quality oil services stocks such as Baker Hughes (NYSE:BHI), Halliburton (NYSE:HAL), Schlumberger (NYSE:SLB) and Weatherford (NYSE:WFT).
- Large-cap oil service stocks "should not be this volatile," Schumm writes, noting that the world consumes ~92M bbl/day of oil, and demand is still growing - albeit at a slower rate - and is relatively inelastic, which requires a high level of service investment every year; low investment levels in 2015 will have to be made up in 2016 or 2017, barring a global economic shock.
- Earlier: "Peak pessimism" at hand for oil services stocks, Citi says.
Tue, Jan. 6, 10:37 AM
- Citigroup analyst Scott Gruber says now could be time for longer-term investors to bulk up on oil services stocks (NYSEARCA:OIH), taking the contrarian view that falling capital spending forecasts and looming bankruptcies by some E&P companies could portend that the industry’s shakeout is closer at hand.
- Meanwhile, Gruber says oil services stocks tend to stop falling as oil reaches "unsustainably low” levels, and investors appear to be through much of their selling since valuations have fallen so low.
- Oil services companies generally have been hit twice as hard as integrated oil majors during the past three months; related tickers include SLB, HAL, NOV, BHI, CAM, ESV, FTI, HP, TS, OII.
Dec. 23, 2014, 6:55 PM
- Goldman Sachs' David Kostin thinks it’s time for patient investors with at least a 12-month time horizon to begin loading up on energy companies.
- The Goldman team recommends refiners such as Marathon Petroleum (NYSE:MPC) and Phillips 66 (NYSE:PSX), as well as midstream companies that are less sensitive to oil prices and offer the potential for dividend growth, including EQT Midstream Partners (NYSE:EQM), Kinder Morgan (NYSE:KMI) and Cheniere Energy (NYSEMKT:LNG).
- With capital spending sure to take a hit and oil prices likely to remain volatile, oil service companies probably aren’t the way to go, but Goldman considers the more defensive names such as Atwood Oceanics (NYSE:ATW), Schlumberger (NYSE:SLB) and Oceaneering (NYSE:OII) as the best of a bad lot.
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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