Why Is Halliburton’s Free Cash Flow Remarkable?
Which Oilfield Service Companies Can Break the Jinx?
Comparing free cash flow growth
In this part, we’ll look at the FCF (free cash flow) growth of Schlumberger (SLB), Halliburton (HAL), Baker Hughes (BHI), and Cameron International (CAM)—the four prominent names in the OFS (oilfield services and equipment) space that we’ve been analyzing in this series. “Free cash flow” is the CFO (cash flow from operations) less the capex.
Halliburton was the growth leader
Halliburton recorded a 200% fiscal 4Q15 FCF increase—compared to the same quarter last year. Halliburton’s free cash flow in fiscal 4Q15 was $449 million. The company’s fiscal 4Q15 CFO fell 23% compared to fiscal 4Q14. Its capex fell 56%. The steeper capex fall relative to the CFO decline led to higher FCF in the most recent quarter.
Schlumberger, Cameron International, and Baker Hughes’s FCF fell
Schlumberger recorded a 42% fiscal 4Q15 FCF decrease—compared to the same quarter a year ago. Its fiscal 4Q15 FCF was $1.55 billion. Schlumberger’s CFO fell 44% in fiscal 4Q15—compared to fiscal 4Q14. It was led by lower revenue. Its capex fell 48% during the same period. However, the lower capex couldn’t offset the falling CFO. This led to the lower FCF. Schlumberger accounts for 24.1% of the Market Vectors Oil Services ETF (OIH).
Cameron International’s fiscal 4Q15 FCF fell 50% to $402 million—compared to $812 million in fiscal 4Q14. From fiscal 4Q14 to fiscal 4Q15, its CFO fell 47%. This more than offset a 24.6% capex fall. It led to the FCF decrease.
Baker Hughes’s fiscal 4Q15 FCF fell 54% to $320 million—compared to the same quarter last year. Baker Hughes’s CFO fell 55% in fiscal 4Q15— compared to the same period the year before. Although the capex fell, it couldn’t offset the CFO fall. The FCF crashed during the same period. Read the previous part in this series to learn how much Baker Hughes plans to spend its capital investment next year.
In the next part, we’ll look into these companies’debt.
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