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Analyzing One-Year Returns for Top Oilfield Services Companies

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Top four OFS companies

In this article, we will look at one-year returns for the top oilfield equipment and services (or OFS) stocks from our select set. These are Schlumberger (SLB), FMC Technologies (FTI), RPC, Inc. (RES), Baker Hughes (BHI), and Oceaneering International (OII).

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Returns analysis

RPC, Inc. has done better than most of its peers in the past year. The company provides specialized oilfield services and equipment to the energy producers. Since March 2015, its stock has returned 13.7%, net of dividends. In the past year, the VanEck Vectors Oil Services ETF (OIH) has returned -20%. OIH is an ETF that tracks an index of 25 listed OFS companies.

Schlumberger, the largest oilfield equipment and services company by market capitalization, has returned -8.5%, net of dividends, in the past year. SLB makes up 7.5% of the Energy Select Sector SPDR ETF (XLE). Baker Hughes, one of the largest OFS companies, provides oilfield services, products, technology, and systems. It operates in over 80 countries.

BHI’s share returned -31%, net of dividends, in the past year. Please read Which Oilfield Service Companies Can Break the Jinx? for a comparative analysis of the largest OFS companies.

FMC Technologies provides products and services that include subsea production and processing systems, surface wellhead production systems, high-pressure fluid control equipment, and measurement solutions. Since March 2015, its stock has returned -27%, net of dividends.

Oceaneering International provides engineered services and products to the offshore oil and gas industry, primarily in the subsea operations, around the world. It has returned -37%, net of dividends, in the past year.

Why did returns vary?

Based on the past year’s performance, many of the oilfield equipment and services stocks have underperformed the industry ETF. The slump in the US rig count, which started in October 2014, has negatively affected the OFS sector. The fall in the upstream companies’ drilling budget hit these OFS companies’ revenues and profitability in varied degrees, depending on the business model diversity of the OFS companies.

Despite falling share prices, these companies will look to improve fundamentally in 1Q16. Plus, returns are expected to increase, which we’ll discuss in the final part in this series.

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