Analyzing Net Debt for SLB, HAL, WFT, and NOV in 2Q17
Comparing debt profiles
The net debt is total debt less cash, cash equivalents, and short-term marketable securities. In this part, we’ll analyze the net debt for our set of OFS (oilfield equipment and services) companies as of June 30, 2017. These companies include Schlumberger (SLB), Halliburton (HAL), Weatherford International (WFT), and National Oilwell Varco (NOV). We already compared these companies’ fundamentals in SLB, HAL, NOV, WFT: How They Stack Up after 2Q17.
In this series
In this series, we’ll compare these four large-cap OFS companies based on their balance sheet strength, market indicators, and relative valuation multiples. We’ll start our discussion by comparing the companies’ net debt in 2Q17.
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Schlumberger had the highest net debt growth
As of June 30, 2017, Schlumberger’s (SLB) net debt growth was the highest among our set of OFS companies. Its 2Q17 total borrowing fell 13% compared to last year. Schlumberger’s cash and marketable securities fell 44% during the same period, which more than offset the fall in its total debt. Its net debt rose 21% in 2Q17—compared to 2Q16. Schlumberger accounts for 3.3% of the SPDR S&P Oil & Gas Equipment & Services ETF (XES). XES fell 20% in the past year—compared to a 19% fall in Schlumberger’s stock price.
Halliburton’s net debt fell in 2Q17
In 2Q17, Halliburton’s net debt fell 8%—compared to 2Q16. In 2Q17, although Halliburton’s total debt fell 14% compared to last year, its cash and marketable securities fell 31% during the same period. Its net debt fell less from 2Q16 to 2Q17.
Weatherford International’s net debt
In 2Q17, Weatherford International’s net debt rose 5%—compared to 2Q16. Its 2Q17 total borrowing rose 6% over the past year, while its cash and marketable securities grew more than the rise in the total debt. It offset the net debt’s growth in 2Q17.
National Oilwell Varco’s debt
National Oilwell Varco’s (NOV) total debt fell 2% in 2Q17—compared to 2Q16. Its cash and marketable securities fell more during this period. So, National Oilwell Varco’s net debt rose 4% in 2Q17—compared to 2Q16.
In the next part, we’ll look at dividend growth and dividend yields for our select set of OFS companies.