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SLB, HAL, NOV, WFT: How They Stack Up after 2Q17

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SLB, HAL, NOV, WFT: How They Stack Up after 2Q17 PART 1 OF 7

Which Large Oilfield Services Stocks Are Outperforming the Industry?

Four oilfield services stocks

Schlumberger (SLB), Halliburton (HAL), Weatherford International (WFT), and National Oilwell Varco (NOV) are four of the most prominent US oilfield services and equipment (or OFS) companies. In this series, we’ll compare these OFS companies’ performances in the past one year.

Which Large Oilfield Services Stocks Are Outperforming the Industry?

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Crude oil price and industry ETF

In the past one year, the VanEck Vectors Oil Services ETF (OIH) has fallen ~18%. The West Texas Intermediate (or WTI) crude oil price has recovered 15% in the past year. So, OIH has grossly underperformed crude oil’s recovery, as the oilfield equipment and services (or OFS) industry remains oversupplied. Read the latest on crude oil prices in Market Realist’s Will the OPEC and Non-OPEC Meeting Drive Crude Oil Futures? In the past one year, the SPDR S&P 500 ETF (SPY) has risen 14%. The Dow Jones Industrial Average (DJIA-INDEX) has risen 19% in the past one year.

Analyzing one-year prices

Halliburton has outperformed the VanEck Vectors Oil Services ETF in the past one year. Since August 8, 2016, its stock has fallen ~6%. Much improved earnings from Halliburton’s North America operations kept its returns above the industry ETF. Halliburton provides services and products to the upstream industry.

By market capitalization, Schlumberger is the largest OFS company. SLB’s stock price has fallen 19% in the past one year. SLB provides technology, information solutions, and integrated project management to energy producers. SLB makes up 20.4% of OIH.

Weatherford International’s stock has fallen ~25% in the past one year, the steepest decline in our set of OFS companies discussed here. WFT provides drilling and evaluation and completion and production services to upstream producers. On March 24, 2017, WFT entered a joint venture agreement with Schlumberger named “OneStim.” Read more on this deal in Market Realist’s What to Expect from Schlumberger Stock after JV with Weatherford.

National Oilwell Varco’s returns have been relatively resilient. They outperformed the industry ETF, decreasing 8% in the past one year. NOV designs, manufactures, and sells equipment and components to energy producers.

Why do returns vary?

The US rig count has more than doubled in the past one year. OFS companies’ revenues and profitability can improve when upstream companies’ drilling and production pick up again, although it will also depend on the business model range of the OFS companies. Many offshore projects that have been deferred in the past two years as a result of depressed crude oil prices could finally see the light of day as oil price starts to recover, which could positively affect OFS companies supplying products and services to the offshore upstream companies. In this context, read Market Realist’s Offshore Drilling: Analyzing Revised Ratings.

Series highlights

In this series, we’ll compare these four large-cap OFS companies based on revenues, earnings, as well as various industry indicators. We’ll start off our discussion by comparing the changes in these companies’ revenues in 2Q17.

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