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The Top and Bottom of Oilfield Service Stocks in 3Q17

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Part 3
The Top and Bottom of Oilfield Service Stocks in 3Q17 PART 3 OF 12

Expected 3Q17 Earnings Growth: Top 5 Oilfield Service Stocks

Could Patterson-UTI Energy come out on top?

Analysts expect Patterson-UTI Energy’s (PTEN) EBITDA (earnings before interest, tax, depreciation, and amortization) to rise ~94% between 2Q17 and 3Q17. Its operating margin is expected to benefit from a greater proportion of pad drilling and longer laterals in West Texas, and rig upgrades, which improve drill efficiency. Patterson-UTI Energy makes up 0.29% of the Vanguard Energy ETF (VDE). VDE has fallen 2% in the past year, whereas PTEN has fallen 3%. For more on the company, read Understanding Patterson-UTI Energy’s Mixed Bag in 2017. The S&P 500 (SPX-INDEX) has risen 17% in the past year.Expected 3Q17 Earnings Growth: Top 5 Oilfield Service Stocks

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Weatherford International’s expected earnings growth

Analysts expect Weatherford International’s (WFT) adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) to be ~$144 million in 3Q17, up 49.6% from 2Q17. This rise could happen as a result of

  • North America’s continued growth, led by Canada
  • higher revenue from the Europe, Caspian, Russia, and sub-Saharan Africa region due to higher activity in the North Sea
  • higher 3Q17 revenue from the Middle East and Asia region
  • revenue growth and margin expansion in the land rig business

U.S. Silica Holdings’s expected EBITDA growth

U.S. Silica Holdings (SLCA) is expected to post $89.6 million in adjusted EBITDA in 3Q17, a ~19% rise from 2Q17. Management expects the company to increase its share of stronger-margin business. It also expects to see additional volumes come online from its Tyler plant expansion in 4Q17. The continuing improvement in North American well economics is expected to result in higher demand for proppant. In 2018, U.S. Silica Holdings expects proppant demand to rise 29%. The industry’s preference for containerized solutions for wellhead transportation is expected to push SLCA’s Sandbox segment towards higher growth.

In comparison, analysts expect Halliburton’s (HAL) EBITDA to grow 18% between 2Q17 and 3Q17. National Oilwell Varco’s (NOV) 3Q17 EBITDA are expected to rise 17%. Next, we’ll look at the five oilfield service companies expected to see the steepest EBITDA fall in 3Q17.

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