Where Superior Energy Stands amid the US Rig Count in 1Q17



Revenue by geography

In 4Q16, Superior Energy Services’ (SPN) revenue share from North America increased. In 4Q16, SPN’s North America revenue share was 77%, as compared to 75% in 3Q16. During the same period, SPN’s aggregate revenues rose 9%.

SPN makes up only 0.01% of the iShares Russell 3000 ETF (IWV). The energy sector makes up 6.1% of IWV, which tracks the Russell 3000 Index (RUA-INDEX) and consists of 3,000 large companies in the US. RUA-INDEX has risen 15% in the past year, as compared to the 10% rise in SPN’s stock price.

Flotek Industries’ (FTK) 4Q16 revenues fell 5% over 3Q16, while Tidewater’s (TDW) revenues fell 10%. Nabors Industries’ (NBR) revenues rose 4% from 3Q16 to 4Q16. (You can read more on FTK in Market Realist’s series Flotek Industries: Analysts’ Call after a Bullish Run.)

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The US rig count

From December 30, 2016, to April 7, 2017, the US rig count rose ~28% and closed at 839. A higher US rig count can increase Superior Energy’s revenues and earnings in 1Q17. Crude oil prices have dropped ~1% since December 30, 2016, but the US rig count has continued to surge. (You can examine which way crude oil prices are moving now in Market Realist’s series Energy Investors: Reviewing Important Weekly Updates.)

Notably, the US rig count has risen ~83% in the past year as of April 7, 2017. The US rig count reached its multiyear high in September 2014. Since then, it has dropped 57% as of April 7, 2017. From December 2016 to March 2017, the international rig count rose ~2%. A higher international rig count could, of course, boost Superior Energy’s revenues and earnings in 1Q17.

Now let’s discuss what SPN’s current implied volatility suggests.


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