39.10 +0.08 (0.21%)
After hours: 5:01PM EDT
|Bid||39.12 x 1000|
|Ask||39.05 x 3200|
|Day's Range||38.76 - 39.75|
|52 Week Range||34.46 - 69.61|
|Beta (3Y Monthly)||1.78|
|PE Ratio (TTM)||26.91|
|Forward Dividend & Yield||2.00 (5.77%)|
|1y Target Est||N/A|
(Bloomberg Opinion) -- Oil and gas producer stocks are deeply unpopular. Oilfield services stocks, on the other hand, are deeply, deeply unpopular:The oily water in which the services companies swim is the money that exploration and production firms spend – and it has dried up. Analysts at Morgan Stanley have just reduced their forecasts for upstream capital expenditure. In the title of the report, “Global Upstream Capex: Growth Still in the Cards,” that “Still” does most of the work.At around $65 a barrel, oil remains well below those triple-digit salad days of early 2014. Still, it’s about double where it was in early 2016, and yet there’s precious little sign of that in E&P capex budgets. Something structural has happened.E&P stocks are unpopular because a decade of high spending did wonders for oil and gas output, “energy dominance” and C-suite pay, but little for investors. So the latter have gone on strike, demanding evidence of a change of heart on the part of management teams, chiefly in the form of tighter spending and more generous payouts to shareholders. You can see the problem for oilfield services, which profited nicely from the E&P sector’s pre-2014 largesse.At the same time, E&P companies still like to grow, so the pressure to do more with less remains high (especially as activists have begun beating the drum on this). Last year’s surge in U.S. oil and gas production was the biggest achieved by any country ever, according to BP Plc, even as upstream capex there was still 22% below the level of 2014.E&P companies depend on their services providers to help achieve the productivity gains that have fueled the shale “miracle.” Yet the rewards for this – such as they are - have flowed overwhelmingly to the client, not the contractor. A decade ago, the oilfield services sector earned a return on capital employed that was more than 13 percentage points higher than the E&P sector, according to analysts at Evercore ISI. By 2018, the sectors had switched places, with services earning 7 percentage points less than their clients. That is some transfer of value.The oilfield services industry shares some pathologies with the E&P business. Contractors invested too heavily in the boom, creating excess capacity and bloated cost structures. When the crash hit, they prioritized market share, the standard response in expectation of an eventual rebound – and the rebound hasn’t taken off. General Electric Co.’s ill-timed foray into the business via Baker Hughes and Weatherford International Ltd.’s meandering shuffle into chapter 11 have provided unwelcome narratives for all this. Today, despite deals such as the recently announced merger between Keane Group Inc. and C&J Energy Services Inc., the sector remains fragmented, particularly in those areas such as pressure pumping that service the U.S. shale industry.Shale is a blessing and a curse. On one hand, it has accounted for all of the growth in global upstream capex since the trough in 2016 and is set to contribute 29% of the forecast growth from here through 2022. On the other, it is a fragmented corner of the business that is highly sensitive to oil prices and has flattened the cost curve across the global industry. Besides trade-war concerns, expectations of frackers taking advantage of any geopolitical spike in oil prices to boost production have helped to keep a lid on that spike, despite numerous provocations.The upshot is a very narrow band in oil prices between celebration and belt-tightening. Morgan Stanley estimates $50 oil in 2020, as opposed to $60, would cut expected cash flow from operations in the global upstream business by a fifth, translating to a 13% drop in capex – which would take it below 2016 levels.Faced with such sensitivities, investors aren’t willing to pay a premium. Bellwethers Halliburton Co. and Schlumberger Ltd. trade at Ebitda multiples similar to where they were in 2015, when spending was headed down, rather than being priced for growth. Spending should grind higher from here; even so, the sector faces a deep-rooted challenge. For E&P companies to win favor with investors again, they must adhere to a regimen that won’t help their contractors win any popularity contests.To contact the author of this story: Liam Denning at email@example.comTo contact the editor responsible for this story: Mark Gongloff at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal's Heard on the Street column and wrote for the Financial Times' Lex column. He was also an investment banker.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Per Rystad Energy, big oilfield services players like Halliburton (HAL) have already begun raising prices for products and services. This is expected to boost their earnings going forward.
Lower investments in oil exploration and production operations hamper demand for oilfield services of Schlumberger (SLB) since the firm helps drillers efficiently drill oil wells.
As the fate of crude exploration and production companies is positively correlated with the commodity price, the recent oil rally therefore perks up the crude weighted-stocks.
Crude oil prices jumped as Iran shot down a U.S. drone. The S&P 500 closed at a new all-time high, and gold prices skyrocketed.
Energy stocks traded broadly higher Thursday, as increased tension in the Middle East fueled a surge in oil prices. The SPDR Energy Select Sector ETF jumped 1.8% in morning trading, with all 29 of its equity components trading higher, while the Dow Jones Industrial Average hiked up 215 points, or 0.8%. Among the more-active members, shares of Halliburton Co. rose 3.0%, Marathon Oil Corp. gained 3.2%, Schlumberger Ltd. tacked on 3.1%, Exxon Mobil Corp. advanced 1.7% and Chevron Corp. added 1.1%. Elsewhere, Chesapeake Energy Corp.'s stock powered up 4.4% on NYSE-leading volume of 6.3 million shares. August crude oil futures rallied 4.5%, after news that Iran's Revolutionary Guard said it shot down a U.S. drone. Also helping boost prices, data out Wednesday showed that U.S. crude supplies fell, and a firmer date for an Organization of the Petroleum Exporting Countries (OPEC) meeting was in place to review pledged production limits.
In the next quarter, the US crude oil production might rise—an important factor that might kill any upside in oil prices. For the week ending June 7, US crude oil's weekly production was near its record high of 12.3 MMbpd.
The consolidation drive in the oilfield service space is reflected in the recent decision of C&J Energy (CJ) & Keane Group (FRAC) to merge and create a diversified oilfield services firm.
Schlumberger NV NYSE:SLBView full report here! Summary * Perception of the company's creditworthiness is positive * ETFs holding this stock are seeing positive inflows * Bearish sentiment is low * Economic output in this company's sector is contracting Bearish sentimentShort interest | PositiveShort interest is extremely low for SLB with fewer than 1% of shares on loan. This could indicate that investors who seek to profit from falling equity prices are not currently targeting SLB. Money flowETF/Index ownership | PositiveETF activity is positive. Over the last month, ETFs holding SLB are favorable, with net inflows of $10.49 billion. Additionally, the rate of inflows is increasing. Economic sentimentPMI by IHS MarkitThere is no PMI sector data available for this security. Credit worthinessCredit default swap | PositiveThe current level displays a positive indicator. SLB credit default swap spreads are within the middle of their range for the last three years.Please send all inquiries related to the report to email@example.com.Charts and report PDFs will only be available for 30 days after publishing.This document has been produced for information purposes only and is not to be relied upon or as construed as investment advice. To the fullest extent permitted by law, IHS Markit disclaims any responsibility or liability, whether in contract, tort (including, without limitation, negligence), equity or otherwise, for any loss or damage arising from any reliance on or the use of this material in any way. Please view the full legal disclaimer and methodology information on pages 2-3 of the full report.
is by far the largest individual holding within the oil services ETF, making up more than 21% of the fund's net assets. Schlumberger shares bounced a bit on Thursday in response to the tanker attacks in the Gulf of Oman, but they're still trading down some 70% from the 2014 highs. It wasn't all that long ago that Schlumberger was viewed as a market darling and a premier name in the energy sector.
The big news overnight were reports that two energy tankers were attacked in the Persian Gulf, near the critical Strait of Hormuz chokepoint. All eyes are on the Iranians, who are locked in a sanctions stalemate with the United States and have threatened to attack energy infrastructure in the region.For now, Tehran is denying responsibility. But traders on Wall Street are busily bidding up crude oil and energy stocks as recent bearishness driven by growing inventories fades fast. This follows Wednesday's 4% lurch lower in West Texas Intermediate, which was testing support near the $50-a-barrel level. * 7 High-Quality Cheap Stocks to Buy With $10 For investors looking to take advantage of rising tensions -- calling to memory the mining of the Persian Gulf in decades past -- consider these four stocks:InvestorPlace - Stock Market News, Stock Advice & Trading Tips Oil Stocks to Buy: Schlumberger (SLB)Shares of oilfield services provider Schlumberger (NYSE:SLB) are bouncing off of support near the late-December lows, setting the stage for a challenge of the 50-day moving average. Such a move would be worth a gain of 11% from here. Shares were recently upgraded to "buy" by analysts at Stifel.The company will next report results on July 19 before the bell. Analysts are looking for earnings of 35 cents per share on revenues of $8.1 billion. When the company last reported on April 18, earnings of 30 cents per share matched estimates on a 0.6% rise in revenues. Philips 66 (PSX)Shares of oil stock Philips 66 (NYSE:PSX) are enjoying the formation of a solid base of support near the $85-a-share level and look ready for a push towards a combination of resistance near $87.50 -- the confluence of its upper Bollinger Band, its 50-day moving average and its mid-May high. A breakout from here would put the mid-April high near $98 in play, which would be worth a gain of 14% from here. * 7 Stocks to Buy for the Coming Recession The company will next report results on July 26 before the bell. Analysts are looking for earnings of $2.35 on revenues of $26.9 billion. When the company last reported on April 30, earnings of 40 cents per share beat estimates by five cents. Hess (HES)Shares of Hess (NYSE:HES) are challenging their 200-day moving average after finding support near its early March lows. Watch for a third attempt at the $67.50 level, which would be worth a gain of roughly 17% from here. Hess is an independent oil and gas producer that has seen its shares churn sideways for more than a decade. Nothing like the specter of another conflict in the Middle East to break the malaise.The company will next report results on July 24 before the bell. Analysts are looking for a break-even results on revenues of $1.6 billion. When the company last reported on April 25, earnings of nine cents per share beat estimates by 36 cents on a 15% rise in revenues. Chevron (CVX)Shares of Chevron (NYSE:CVX) are breaking up and out of a three-month consolidation range after finding support under their 200-day moving average. Watch for another challenge of the $125-a-share level that has bounded its range since late 2017. Analysts at Citigroup recently resumed coverage of the stock with a buy rating. * 7 Dark Horse Stocks Winning the Race in 2019 The company will next report results on July 26 before the bell. Analysts are looking for earnings of $2.02 per share on revenues of $41.5 billion. When the company last reported on April 26, earnings of $1.39 beat estimates by six cents on a 6.8% decline in revenues.As of this writing, William Roth did not hold a position in any of the aforementioned securities. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 7 High-Quality Cheap Stocks to Buy With $10 * 7 U.S. Stocks to Buy With Limited Trade War Exposure * 6 Growth Stocks That Could Be the Next Big Thing Compare Brokers The post 4 Oil and Gas Stocks to Buy appeared first on InvestorPlace.
Energy stocks rallied in unison Thursday to pace the S&P 500's sector gainers, with crude oil futures surging as U.S. Secretary of State Mike Pompeo said Iran was to blame for a number of recent incidents, including the attacks Thursday on two oil tankers in the Middle East. The SPDR Energy Select Sector ETF rallied 1.3% in afternoon trade, with all 29 equity components gaining ground. Among the more-active components, shares of Halliburton Co. hiked up 2.8%, Marathon Oil Corp. gained 1.8%, Schlumberger NV rose 3.7%, Exxon Mobil Corp. tacked on 0.8% and Kinder Morgan Inc. advanced 0.8%. Meanwhile, crude oil futures surged 2.8%, after settling Wednesday at a 5-month low. The energy ETF has lost 6.9% year to date, while the S&P 500 tacked on 2.8%.
The oil services fund has spent the last six months testing 2001 support and may complete an historic double bottom reversal.
(Bloomberg Opinion) -- In a commodity business, cost is king. The efficient producer ultimately wins more business and more investment – and that is as true for countries as it is for companies.The shale boom, along with slowing energy demand growth in much of the industrialized world, has changed the global oil and gas business. Rising productivity in areas such as the Permian and Appalachian basins has been a deflationary force rippling out across the industry, forcing producers everywhere from Canada’s oil sands to Brazil’s deepwater fields to cut costs.Similarly, North America has become a magnet for investment, with even such former globetrotters as Chevron Corp. and Exxon Mobil Corp. rediscovering an affinity for home. In parallel, Schlumberger Ltd., a bellwether for upstream spending beyond the U.S., trades around levels reached in the depths of the financial crisis, despite the fact that we are now about three years into a recovery in oil prices.Oil and gas companies are working, with varying degrees of success, to redefine themselves in the face of this, with a particular focus on keeping costs down. One of those costs is largely out of their hands, except in the sense that they get to choose where they drill: taxation.In a report published last month, analysts at Morgan Stanley surveyed nine countries, other than the U.S., where oil majors have typically been active. They found that the government’s share of net present value in its remaining resources averages about 63% under current fiscal terms for those countries(1). The U.S. figure, meanwhile, is just 36%.Industry griping about harsh fiscal terms is an old sport and one that amounted to little when it was thought that ever more of the world’s supply would migrate to the likes of Saudi Arabia. Only a decade ago, oil majors were signing up to be paid a relative pittance per barrel for the chance to drill in Iraq. Times have changed. OPEC exists pretty much as a mere adjunct of Saudi Arabia at this point, with that country’s latest round of haggling with non-member Russia over production cuts being the latest reminder. And with “peak oil” having morphed into speculation about peak demand, the old assumption that the value of petrostates’ underground hoards would only appreciate over time has been overturned. So just as companies are competing to be the lowest-cost, Morgan Stanley’s analysts point out that there is an incentive for countries to do the same.Rystad Energy, a research firm, has calculated breakeven prices for new offshore projects in various countries as well as in the Permian basin, both before and after factoring in the fiscal take.Some countries have already loosened terms to attract more investment. For example, the U.K. slashed tax rates in 2016 in a bid to stem the slide in oil and gas production. Output in 2018 was 8% higher than in 2015, and Brent crude oil prices had risen 53% in sterling terms, but the government’s overall tax take fell by almost a quarter. In a different way, and at the other end of the spectrum, Saudi Arabia’s reform plans aimed at diversifying the tax base away from oil represents another attempt to effectively reduce the country’s overall breakeven price.What’s striking about the chart above is that, absent the fiscal impact, the range from low to high in terms of breakeven costs is relatively small at about $20 a barrel, with Saudi Arabia at the low end with sub-$24 and Nigeria up at just over $43. Once you factor in the governments’ take, that range doubles, spanning $33 to almost $74.The implication is that, just as the shale-led decline in upstream unit costs has been deflationary, fiscal competition between states could add to that effect. Those countries that rely heaviest on oil and gas taxes will, of course, find it hard to loosen up. Equally, though, they will ultimately confront the prospect of rival producers taking a bigger share of a market heading toward a plateau. Barrels left in the ground don’t provide any taxes at all.(1) The nine countries are Angola, Argentina, Brazil, Egypt, Kazakhstan, Malaysia, Nigeria, Norway and Oman. Morgan Stanley used data from Wood Mackenzie.To contact the author of this story: Liam Denning at firstname.lastname@example.orgTo contact the editor responsible for this story: Mark Gongloff at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal's Heard on the Street column and wrote for the Financial Times' Lex column. He was also an investment banker.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Is Schlumberger Limited. (NYSE:SLB) a good bet right now? We like to analyze hedge fund sentiment before doing days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of […]
One analyst expects the company to rebound as drilling activity improves and investors see that it’s earning enough cash to pay its large dividend.