Oilfield equipment and services companies
In this series, we’ll look at five major OFS (oilfield equipment and services) companies’ earnings trends over the last few quarters. We’ll also try to analyze if the market expects their earnings to stabilize or fall more from here. The five companies are:
- Schlumberger (SLB)
- Halliburton (HAL)
- Cameron International (CAM)
- National Oilwell Varco (NOV)
- Weatherford International (WFT)
OFS companies assist E&P (exploration and production) companies at various stages across the entire process of searching for and producing oil and gas. This can range from the analysis of exploration wells, all the way to the equipment used in lifting and transporting the energy produced from these wells.
As noted in the above chart, Halliburton has been the best performer in the group since June 1, 2012. It returned 57.5%. During the same period, Schlumberger returned 53%. Cameron International and Weatherford returned 19% and 17%, respectively.
The VanEck Vectors Oil Services ETF (OIH) returned 10.5% over the past three years. OIH tracks an index of the top 25 listed OFS companies. All of the companies discussed here are part of OIH. Together, they account for almost 46% of its holdings.
National Oilwell Varco underperformed the industry with a -12% return in the past three years.
Why did the returns vary?
Halliburton and Schlumberger’s returns stood out because their revenue grew steadily during the past 12 quarters—before the recent slump in crude oil prices ended the trend. You may also note that some of the best OFS stocks in the group have more diversified operations than the others.
Stocks with US centric businesses have suffered more due to their exposure to the US shale boom. US shale operations have been severely affected by the recent slump in energy prices.
We’ll begin our analysis with Schlumberger in the next part of this series.