The Zacks Analyst Blog Highlights: Schlumberger, Halliburton, SM Energy, Petrobras and Royal Dutch Shell

For Immediate Release

Chicago, IL – October 26, 2016 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Schlumberger Ltd. (NYSE:SLB –Free Report),Halliburton Company (NYSE:HAL –Free Report),SM Energy Co. (NYSE:SM –Free Report), Petrobras (NYSE:PBR –Free Report) and Royal Dutch Shell plc (NYSE:RDS.A – Free Report).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Tuesday’s Analyst Blog:

Oil & Gas Stock Roundup: SLB, HAL, SM, PBR, RDS.A

It was a week which saw oil prices hit a 15-month peak, while natural gas futures fell below the psychologically important $3 threshold.

On the news front, oilfield service majors Schlumberger Ltd. (NYSE:SLB –Free Report) andHalliburton Company (NYSE:HAL – Free Report) kicked off the energy earnings season with better-than-expected numbers. Importantly, both the companies indicated that their North American clients have returned to drilling this summer.

Overall, it was a mixed week for the sector. While West Texas Intermediate (WTI) crude futures edged up 1% to close at $50.85 per barrel, natural gas prices plunged 8.9% to $2.993 per million Btu (MMBtu). (See the last ‘Oil & Gas Stock Roundup’ here: RSP Permian's $2.4B Buy, Chevron's Bangladesh Exit Plans .)

Oil prices notched up their fifth successive weekly gain as investors clung on to optimism generated by OPEC and non-OPEC players’ commitments to slash production targets next month.

Apart from the OPEC announcement, oil prices were also supported by the U.S. Energy Department's weekly inventory release, which showed that domestic crude stockpiles declined unexpectedly.

To a large extent though, the optimism was tempered by the Baker Hughes report revealing an eighth straight rise in the U.S. oil rig count and pointing to the resurgence in shale drilling activities

Meanwhile, natural gas turned lower following a higher-than-expected build. The commodity has also been hampered by a warmer-than-normal autumn weather that translates into weak demand.

Recap of the Week’s Most Important Stories

1. The world’s largest oilfield services provider Schlumberger Ltd. reported third-quarter 2016 earnings of 25 cents per share (excluding Cameron merger and integration charges), which came in above the Zacks Consensus Estimate of 22 cents. Higher activities in the land market of the U.S along with fracturing work recovery in North America led to the earnings beat. This clearly indicates that oil producers are putting more rigs in the continent again.

However, the bottom line decreased substantially from 78 cents per share earned in the year-earlier quarter. Continual decline in deepwater operations led to the year-over-year deterioration.

Schlumberger expects the demand for oil to increase in 2017. According to the company the increase in demand as well as the OPEC’s intention to cut crude production would lead to oil price recovery in the long run. (Read more: Schlumberger Earnings Beat, Revenues Miss in Q3 .)

2. Major oilfield services provider Halliburton Company reported surprise third quarter profit on the back of continued and effective cost management. The world’s No. 2 oilfield-services company’s ninth consecutive quarterly outperformance was also helped by improved utilization on the back of growing North American rig count. Halliburton currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here .

Halliburton’s net income per share came in at 1 cent, contrary to the Zacks Consensus Estimate for a loss of 7 cents. However, revenues of $3,833 million missed the Zacks Consensus Estimate of $3,897 million amid the oil slump.

Along the results, Halliburton also sounded optimistic in its view that the current industry upturn will boost rig count further. As a proof of the recovery, Halliburton reported 9% sequential growth in North American sales. However, most of this bullish sentiment was offset by lower business in other parts of the world.

Halliburton warned that fourth quarter activity is likely to be weak due to holiday and seasonal weather-associated disruptions. Moreover, pricing pressure is expected to continue over the near-term with international business set to be flat sequentially. (Read more: Halliburton Swings to Surprise Q3 Earnings on Cost Cuts .)

3. Denver, CO-based oil and gas producer SM Energy Co. (NYSE:SM – Free Report) agreed to acquire almost 35,700 net acres in the Midland Basin of West Texas for a consideration of $1.6 billion in cash and stock. Simultaneously, the company decided to divest its resources in North Dakota’s Williston Basin for roughly $785 million.

The acquisition plan reflects SM Energy’s focus on increasing its resources in the most productive properties so as to be able to earn significant cash flows for shareholders in the long run. Notably, the latest deal, which is anticipated to complete in December this year, will increase SM Energy’s asset base in the Permian Basin to 82,450 net acres.

We note that SM Energy has been selling assets that do not fit its portfolio to enhance its presence in the Permian Basin. In fact, a major part of the aforesaid Permian Basin acreage buyout will be funded using the proceeds generated from the sale of Williston Basin properties. The remainder will likely be financed from the company’s revolving credit line. (Read more: SM Energy Snaps Up Additional Permian Acreage for $1.6B .)

4. Brazil’s state-owned energy major Petrobras (NYSE:PBR – Free Report) agreed to settle four lawsuits by investors in New York federal court. The lawsuits – led by PIMCO Total Return Fund, et al., Dodge & Cox International Stock Fund, et al., Janus Overseas Fund, et al., and Al Shams Investments, et al – claimed losses resulting from a vast corruption scandal that engulfed the Rio de Janeiro-headquartered company. The plaintiffs alleged that Petrobras gave false information to investors about the scope and scale of the graft scheme that has wiped billions of dollars in value from the company's books.

Following the settlement, Petrobras will include a $353 million provision in the third quarter to cover the costs. Denying all allegations of wrongdoing, Petrobras maintained that the settlement was meant at eliminating the uncertainties and costs associated with the litigations

5. Integrated energy major Royal Dutch Shell plc (NYSE:RDS.A – Free Report) recently announced that its affiliate, Shell Canada Energy, has entered into an agreement to divest around 206,000 net acres of non-core oil and gas properties in Western Canada to local natural gas producer Tourmaline Oil Corp. This sale is expected to garner more than $1 billion.

Per the Anglo-Dutch energy giant, the proceeds comprise $758 million in cash and Tourmaline shares valued at $279 million. The deal is effective Nov 1 and expected is to close at the end of 2016.

This sale is part of the Shell’s plan to raise around $30 billion from assets sales in the three years through 2018 to help shore up its finances following its mega merger with BG Group. Notably, the merger with BG Group raised Shell’s total debt level to $90.3 billion from $52.9 billion a year earlier. (Read more: Shell Affiliate to Divest Canadian Assets Worth $1 Billion .)

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1 Stock of the Day pick for free.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Strong Stocks that Should Be in the News

Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year. See these high-potential stocks free >>.

Get the full Report on SLB - FREE

Get the full Report on HAL - FREE

Get the full Report on SM - FREE

Get the full Report on PBR - FREE

Get the full Report on RDS.A - FREE

Follow us on Twitter: https://twitter.com/zacksresearch

Join us on Facebook: https://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Media Contact
Zacks Investment Research

800-767-3771 ext. 9339

support@zacks.com

https://www.zacks.com/

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.

This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
SCHLUMBERGER LT (SLB): Free Stock Analysis Report
 
HALLIBURTON CO (HAL): Free Stock Analysis Report
 
SM ENERGY CO (SM): Free Stock Analysis Report
 
PETROBRAS-ADR C (PBR): Free Stock Analysis Report
 
ROYAL DTCH SH-A (RDS.A): Free Stock Analysis Report
 
To read this article on Zacks.com click here.