The View from the Oil-Field Services Industry
We review key takeaways for investors from Schlumberger and Halliburton’s first-quarter results and conference calls.
Narrowing Our Focus
We narrow our Focus List and dig deep into our picks’ fourth-quarter results to kick the tires on our investment theses.
Focus List (Mostly) Outperforms and Portfolio Updates
The improved outlook for oil prices and the rotation into energy stocks has lifted most boats in the sector, though we’re pleased that nine of the 13 names on our Focus List have outperformed the S&P 500 Energy Index over an equivalent holding period. We review our Focus List and discuss earnings and other pertinent developments affecting our Portfolio holdings.
Focus List: Upgrades and a Value Swap
We swap one value-oriented play on the Permian Basin for one that offers exposure to more near-term upside catalysts.
Surveying the Oil-Field Services Landscape
The tale of two cycles looks set to continue for another year. Drilling activity may have bottomed in the international markets, but pricing pressure will persist until price deflation improves break-evens and upstream operators have more confidence in the outlook for oil prices. Meanwhile, some US exploration and production companies may moderate their spending increases relative to last year, but this short-cycle market remains the best bet for incremental growth and pricing gains in 2018–especially if our call for oil prices to average between $55 and $60 per barrel pans out. Given our preference for US exposure at this point in the cycle, we review the challenges, opportunities and market dynamics in three prominent onshore service lines through the lens of companies’ third-quarter results: contract drilling, pressure pumping and proppant.
Picking through a Bumper Crop of Oil-Field Service IPOs
The recent bumper crop of oil-field service IPOs includes a number of commoditized businesses seeking to strike while the iron is hot and a few niche plays that could be worth a look.
Focus On The Permania
The latest additions to the Energy & Income Advisor Focus List have lagged of late, primarily because of the selloff in West Texas Intermediate crude oil. In light of these recent market moves, we we revisit our outlook and investment strategy.
Beyond The Big Four
The bullish case for US oil-field services hinges on accelerating drilling and completion activity helping to relieve the capacity overhang built up during the boom years, potentially setting the stage for a recovery in pricing.
Industry survivors with superior scale and balance sheets have an opportunity to take market share from smaller operators. Oil-field service companies have also slashed costs aggressively, providing earnings leverage to a recovery in volumes.
At the same time, investors must remember that many of these companies operate cyclical businesses and consider the extent to which current valuations have priced in any incremental upside in earnings.
Schlumberger vs Halliburton
We delve into fourth-quarter results and management commentaries from oil-field-service giants Schlumberger and Halliburton to form a complete picture of the trends playing out in North America and international markets.
Quarterly Check-Up
A number of our Model Portfolio holdings have reported third-quarter results. We look at how they fared and analyze their future growth prospects.
Live Chat with
Elliott and Roger on Oct. 29, 2020
Portfolios & Ratings
Model Portfolios
Balanced portfolios of energy stocks for aggressive and conservative investors.
Producers and Drillers
Our take on more than 50 energy-related equities, from upstream to downstream and everything in between.
MLPs and Midstream
Our assessment of every energy-related master limited partnership.
International Coverage
Roger Conrad’s coverage of more than 70 dividend-paying energy names.
Experts
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Elliott H. Gue
Founder and Chief Analyst: Capitalist Times and Energy & Income Advisor
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Roger S. Conrad
Founder and Chief Analyst: Capitalist Times and Energy & Income Advisor