By Melodie Warner
TAKING THE PULSE: Merger and acquisition activity has been
picking up in the oil-field services sector as the market's revenue
outlook improves and some of the larger players have the capacity
to add leverage. The ongoing global-economic slowdown had some
experts bracing for gloomy results in the prior quarter. But they
were pleasantly surprised to see growth abroad and stability at
home. Barclays has said conditions are ripe for large oil-field
service and equipment companies--like Halliburton Co. (HAL) and
Schlumberger Ltd. (SLB)--to continue to snap up smaller companies
and assets.
Oil-field-services equipment supplier National Oilwell Varco
Inc. (NOV) agreed in August to acquire Robbins & Myers Inc.
(RBN) for $2.55 billion and had already snapped up several smaller
companies earlier this year. Other recent deals include
Schlumberger buying a 20.1% stake in Hong Kong-listed Anton
Oilfield Services Group (ATONF, 3337.HK) and Halliburton's
acquisition of Petris Technology, a supplier of data-management and
integration software.
COMPANIES TO WATCH:
Halliburton Co. (HAL) - reports Oct. 17
Wall Street Expectations: Analysts polled by Thomson Reuters
recently expected a profit of 68 cents a share on $7.15 billion in
revenue, compared with adjusted earnings per share of 94 cents and
revenue of $6.55 billion a year earlier.
Key Issues: The top seller of North American
hydraulic-fracturing services saw its second-quarter earnings fall
on higher costs for fracking. But the company's rising
international revenue helped it to beat Wall Street's expectations.
The company has predicted profit margins in the U.S. will return to
normal levels as guar prices and the costs to move equipment from
dry natural gas fields to oil-rich plays come down.
Schlumberger Ltd. (SLB) - reports Oct. 19
Wall Street Expectations: Analysts polled by Thomson Reuters
recently expected a profit of $1.07 a share on $10.75 billion in
revenue, compared with adjusted EPS of 98 cents and revenue of
$10.23 billion a year earlier.
Key Issues: The world's largest oil-field-services company's
rising activity in the deep waters of the Gulf of Mexico helped to
offset stagnation in North American hydraulic fracturing margins
during the second quarter. Its international revenue growth also
showed the euro-zone crisis and faltering growth in China didn't
produce a massive pullback in oil drilling, as had been feared.
Investors will be looking to see if oil-field activity continues to
hold on in the face of declining prices.
Baker Hughes Inc. (BHI) - reports Oct. 19
Wall Street Expectations: Analysts polled by Thomson Reuters
recently expected a profit of 84 cents a share on $5.46 billion in
revenue, compared with adjusted EPS of $1.18 a share and revenue of
$5.18 billion a year earlier.
Key Issues: Lower taxes and better-than-expected North American
margins contributed to Baker Hughes's 30% second-quarter profit
growth. The oil-field-services company has said it is
well-positioned to take advantage of an international upturn in
demand and its North American business also appears to be
stabilizing.
Nabors Industries Ltd. (NBR) - reports Oct. 23
Wall Street Expectations: Analysts polled by Thomson Reuters
recently expected a profit of 38 cents a share on $1.72 billion in
revenue, compared with 44 cents a share in earnings from continuing
operations--excluding acquisition costs, rig-retirement impacts and
other items--and $1.66 billion in revenue a year earlier.
Key Issues: The world's largest onshore oil and gas driller
swung to a second-quarter loss as a big write-down exacerbated
disappointing results in its pressure pumping and international
businesses. The company has warned near-term results will be
pressured by an increasingly competitive land-rig market. But
Nabors believes its longer-term outlook remains promising as shale
development expands.
Weatherford International Ltd. (WFT) - reports Nov. 13
Wall Street Expectations: Analysts polled by Thomson Reuters
recently expected a profit of 24 cents a share on $3.92 billion in
revenue, compared with adjusted EPS of 26 cents a share and revenue
of $3.37 billion a year earlier.
Key Issues: Weatherford's second-quarter revenue jumped 24% on
continued strength in North America, but unresolved accounting
problems prevented it from reporting net income. The
oil-field-services company has said it expects to restate its
previous reports for 2011 and the first quarter of 2012.
Weatherford also forecast third-quarter earnings between 30 cents
and 33 cents a share--above the 24-cent consensus estimate--saying
it expects continued international growth and expanding margins in
Latin America.
Write to Melodie Warner at melodie.warner@dowjones.com
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