Large Oil Services Companies Book Majority of Revenue Already for 2013; Solid Growth in International Businesses

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: What are some of the key things you've taken from the earnings season so far?

Mr. West: The key is that international business will definitely grow solidly in 2013. The big service companies have booked the majority of their revenue already for 2013. They can see it; it's very visible, and we'll see it play out as we go through the year.

Second, most companies are calling a bottom or can sense a bottom developing in the U.S. land business. Third, Gulf of Mexico results have been spectacular so far. Hornbeck and the big-cap service companies all saw very good sequential growth in the Gulf of Mexico. And then for the equipment companies the biggest theme has been continued growth in orders and in backlog. The equipment revolution is very much underway and continuing, and we're confident that subsea orders are poised to pick up in here.

TWST: The last time we talked, you advised folks to steer away from the North American cyclical names and more towards deepwater, international names. It sounds like you are bullish on everybody at this point.

Mr. West: In North America, we think that the bottom has set in, and the stocks are pretty cheap if you want to have more exposure to North America. But, I can't dismiss the fact the international market is growing nicely. If I were to pick an area to de-emphasize, it would probably be more of the offshore drillers in general.

Really, that's because the drilling stocks tend to work better when day rates are moving up quickly and when earnings estimates are being revised higher. We've gone through that cycle, and the rates for deepwater are plateauing in the $600,000 to $650,000 range...

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.

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