Forum Energy Technologies’ revenue growth
All of Forum Energy Technologies’ (FET) segments witnessed revenue falls in 1Q16 compared to 1Q15. Its Drilling & Subsea segment witnessed a steep revenue fall of ~60%, while its Production & Infrastructure segment was the most resilient, falling by only ~33% in the same period.
In comparison, 1Q16 revenue for Halliburton (HAL), FET’s larger market capitalization peer, fell by 40% compared to a year earlier. Forum Energy Technologies makes up 0.03% of the ProShares UltraPro Russell 2000 ETF (URTY). URTY aims for three times the returns of the daily performance of the Russell 2000 Index.
FET’s value drivers
Some negative factors affecting FET’s value include the following:
- depressed crude oil prices
- lower drilling activity in North America
- a persistent fall in rig count
- reduced sales of surface production equipment in the United States
These negative factors have been partially offset by higher valve sales to midstream and process industries in 1Q16.
Forum Energy Technologies’ strategy for 2Q16 and beyond
The addition of FET’s new Completion segment is expected to complement its exposure to the midstream, downstream, and petrochemical areas. Well completion activities may increase given industry trends of longer lateral wells and more complex completions.
FET’s management expects 10% lower 2Q16 revenue compared to 1Q16 revenue due to lower energy prices and a lower upstream drilling budget.
FET expects growth through selective acquisitions and investment in new product development. It also plans to increase its investment in the Middle East, doubling its market share in the next three to four years.
Next, let’s discuss how FET’s management outlook has changed in recent quarters.