24 Nov

The 5 Worst Oilfield Companies by Market Returns

WRITTEN BY Alex Chamberlin

Year-to-date returns

In 2017 so far, many companies in the oilfield equipment and services (or OFS) industry produced negative returns on the stock market. In this series, we’ll analyze the worst five year-to-date stock market returns from companies in the OFS industry, excluding the offshore drillers. We’ve selected companies in the OFS industry with market capitalizations over $100 million.The 5 Worst Oilfield Companies by Market Returns

Worst five OFS companies

Key Energy Services (KEG) saw the steepest dip in stock prices in the OFS industry, as we discussed in our analysis here. Year-to-date, its stock price fell ~67% as of November 20. KEG is an onshore rig–based well servicing contractor. Its operating segments are U.S. Rig Services, Fluid Management Services, Coiled Tubing Services, Fishing and Rental Services, and International segments.

Nabors Industries (NBR) provides drilling and rig services, including oilfield equipment manufacturing, rig instrumentation, optimization software, and directional drilling services. It ranks the second-lowest in terms of year-to-date stock market returns in the OFS industry. Year-to-date, its stock price fell 64% as of November 20. Fairmount Santrol Holdings (FMSA), which provides sand-based proppant solutions for energy upstream companies, produced -57% returns year-to-date.

Flotek Industries (FTK) and TESCO Corporation (TESO) also feature in the list of the top five underperformers in the OFS industry. Year-to-date, FTK fell 50% while TESO fell 52% as of November 20. The VanEck Vectors Oil Services ETF (OIH) saw -28% year-to-date returns, which shows the sheer weakness in the industry. The Dow Jones Industrial Average (DJIA-INDEX) rose 19% year-to-date as of November 20.

Why did returns underperform?

Year-to-date, the West Texas Intermediate (or WTI) crude oil price has recovered 4% as of November 20 while the US rig count has risen 39%. However, the OFS industry’s services and equipment remain in oversupply, which has kept their earnings under stress. So returns have, for the most part, significantly underperformed crude prices and the broad market’s returns. Learn more about the top OFS companies in Market Realist’s Oilfield Services after 3Q17: SLB, HAL, BHGE, and NOV.

Next, we’ll compare year-to-date returns from KEG with market indicators and analyze the fundamental metrics.

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