Dril-Quip, Inc. DRQ recently agreed to work with Proserv Group, a controls technology company, which is expected to boost the former’s product offerings. Per the deal, Dril-Quip will depend on Proserv for building its subsea control systems for clients.
The deal will likely enable the oil and gas equipment and service provider to support its existing subsea controls clients with the expertise of Proserv. Moreover, it will provide both the companies with a framework to carry out joint marketing and collaboration efforts. Through the joint marketing system, Dril-Quip can offer subsea trees while Proserv can provide subsea controls to clients. This move is expected to provide the clients with advanced technology solutions at cheaper rates. It is expected to make offshore project executions more profitable.
The strategic decision comes at a time when the global energy sector has taken a hit from the coronavirus pandemic. Exploration and production companies in the offshore market are looking for reducing costs in their resources. As such, the consolidation of services offered by Dril-Quip and Proserv will provide the clients with the opportunity of increasing value from offshore projects.
Dril-Quip manufactures highly-engineered equipment employed by explorers in onshore and offshore resources. These are specifically utilized for drilling in deepwater and harsh environmental conditions. Its strength is visible from a backlog of $261 million as of Mar 31, 2020. Of the existing backlog, 70% will likely be turned to revenues this year, while the rest will be converted the next year.
Dril-Quip’s shares have lost 0.3% from the beginning of the second quarter against 42.2% rise of the industry it belongs to.
Zacks Rank & Stocks to Consider
Currently, Dril-Quip has a Zacks Rank #3 (Hold). Some better-ranked players in the energy space include Chaparral Energy, Inc. CHAP, CNX Resources Corporation CNX and Concho Resources Inc. CXO, each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Chaparral Energy’s bottom line for 2020 is expected to rise 57.8% year over year.
CNX Resources beat earnings estimates thrice and met once in the last four quarters, with average positive surprise of 111.5%.
Concho Resources has a positive earnings surprise of 4.9% in the last four quarters.
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CNX Resources Corporation. (CNX) : Free Stock Analysis Report
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DrilQuip, Inc. (DRQ) : Free Stock Analysis Report
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