Oil Services and Equipment Sector Improving; Big-Cap Service Companies All Trading at Least One or Two Standard Deviations Below Historical Averages

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: Which segment is the best way to get exposure to the sector this year, and why?

Mr. West: We think the large-cap diversifieds are the most attractive in the group, because they have somewhat of a barbell effect. They are clearly the beneficiaries of the large and long-term expansion in international E&P spending that we see unfolding and perhaps accelerating this year, and they also are some of the biggest players in the North American market as well.

As North America recovers, I think you're getting the very powerful impact on multiples and earnings of the continued expansion internationally, plus the recovery in North America. If both of those things play out, there are not a lot of holes I can shoot in those stories.

And the big-cap service companies - Schlumberger, Halliburton, Baker Hughes and Weatherford (WFT) - are all trading at least one, if not two, standard deviations below historical averages, so valuations are attractive and the market is improving. I think that lends itself well to very good share price performance as we go through the year for those four. Our favorites are Halliburton and Schlumberger.

TWST: What separates them from the other two?

Mr. West: Baker still has some issues to overcome in their North American business. They are working to further develop their pressure pumping businesses. The BJ Services acquisition they did a couple of years ago hurt them when the market rolled over, and they are still working to fix that operation.

The next round of self-help is going to involve trying to get a better customer base. Unfortunately a lot of these...

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)