uploads/2015/11/EPS3.jpg

Analyzing the EPS Growth of 4 Oilfield Service Companies

By

Updated

Comparing EPS growth 

In this article, we will look into which among our select oilfield equipment and services (or OFS) group recorded the best and worst earnings per share (or EPS) growth in 3Q15. None of the companies recorded earnings growth in 3Q15 over the previous-year quarter. However, some have managed to fare better than others.

Article continues below advertisement

RIG’s reported 3Q15 net income

Transocean’s (RIG) 3Q15 net income improved remarkably over 3Q14. Its 3Q15 net income was $321 million versus a ~$2.2 billion loss a year earlier. In 3Q14, RIG’s net income included a $2.6 billion impairment loss related to goodwill and its deepwater floater asset group. At the operating income level, operating and maintenance costs did decrease in 3Q15. However, that was attributable to lower drilling activity. RIG makes up 0.38% of the Energy Select Sector SPDR ETF (XLE).

ESV and OII’S earnings dipped

Ensco (ESV) recorded a 32% 3Q15 EPS decline compared to the year-ago quarter. Its 3Q15 net income was $288 million versus $425 million a year earlier. Besides decreases in revenues, as discussed earlier in the series, ESV’s 3Q15 depreciation expenses and other expenses increased over 3Q14. This was partially offset by an early contract termination payment and lower contract drilling expense.

Oceaneering International (OII) recorded a 45% 3Q15 EPS decline compared to the year-ago quarter. Its 3Q15 net income was $68.5 million versus $124.3 million a year earlier. The primary reason OII’s net income declined in 3Q15 was lower revenue compared to 3Q14. This resulted primarily from demand declines for tooling and installation workover and control system services. OII’s operating costs fell in 3Q15 over 3Q14, partially offsetting the negative effects of falling revenues on EPS.

OIS’s woes deepen

Oil States International’s (OIS) 3Q15 net income dropped drastically compared to 3Q14. The company recorded a 97% 3Q15 EPS decline compared to the year-ago quarter. Its 3Q15 net income was $1.7 million versus $56.9 million a year earlier. OIS’s Well Site Services segment saw the steepest decline at the operating level. On a year-over-year basis, this segment’s EBITDA fell 48% versus a 35% EBITDA level fall in OIS’s Offshore Products segment. OII’s net income fell due to the following:

  • a decrease in revenue per completion service job
  • lower utilization in the land drilling business
  • lower contributions across all of OIS’s offshore product lines

Next, we will analyze the capital expenditure growth of these companies.

Advertisement

More From Market Realist