Growth in Aftermarket for BOPs and a Move Toward Using Dual BOPs on New Offshore Rigs: Drilling Equipment Suppliers Benefit from Heightened Safety Standards Following Macondo

Wall Street Transcript

67 WALL STREET, New York - March 6, 2013 - The Wall Street Transcript has just published its Oil & Gas: Drilling Equipment and Services Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Capital Expenditures and Consolidation Activity - Frontier Exploration and Development - Shale Drilling Capital Expenditures - Oil Price Expectations - Shale Drilling Dynamics - Shale, Offshore and Deepwater Drilling - Oil and Gas Price Divergence - Offshore Deepwater Oil Discoveries

Companies include: Schlumberger Limited (SLB), Halliburton Company (HAL), Baker Hughes Inc. (BHI), Weatherford International Ltd. (WFT), Cameron International Corporat (CAM), Noble Corp. (NE), Hornbeck Offshore Services, In (HOS), Lufkin Industries Inc. (LUFK) and many more.

In the following excerpt from the Oil & Gas: Drilling Equipment and Services Report, an expert analyst discusses the outlook for the sector for investors:

TWST: And aside from that group where else are you pointing investors these days?

Mr. West: We like Cameron International (CAM). Cameron is one of the leading capital equipment suppliers to the industry, and it's one we see backlog continuing to grow throughout 2013 and into 2014. Cameron really hits the market in two of our favorite ways.

Number one is their blowout preventer business, which is benefiting from new rig construction from heightened safety standards following the Macondo incident, so there is growth in aftermarket for BOPs, as well as in the move toward using dual BOPs on new offshore rigs.

Number two, Cameron is one of the largest players in the subsea production market. They recently entered into a joint venture with Schlumberger called OneSubsea, which we think will be a very powerful force in the subsea market. And subsea, as I mentioned earlier, is one of the key themes of this cycle. It's a key secular growth story here, and they are one of the biggest beneficiaries of that.

In the offshore drilling group, Noble (NE) is our favorite. They've had some operational hiccups recently, mostly driven by some new rig deliveries. However, they have one of the most ambitious new rig construction programs of the offshore drillers. They saw the need to re-fleet early and they ordered new rigs.

While they've had some downtime related to bringing these rigs into the fleet, we think that will start to dissipate and execution will improve. Earnings estimates are now much more achievable. But as a result some of the missteps in recent quarters...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Rates

View Comments (0)