Ranking the Bottom 5 OFS Companies by Free Cash Flow


Dec. 28 2017, Updated 12:43 p.m. ET

OFS companies’ free cash flow

We recently discussed the top five free cash flow (or FCF) earners in the oilfield equipment and services (or OFS) industry. In this series, we’ll analyze the bottom five FCF generators in 3Q17 in the OFS industry, excluding the offshore drillers.

We have selected companies in the OFS industry with market capitalization exceeding $100 million. Free cash flow is cash flow from operations minus capital expenditure (or capex).

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Bottom five OFS companies

Baker Hughes, a GE Company (BHGE) saw the lowest free cash flow in 3Q17 in the OFS industry. On July 3, 2017, BHGE was formed from the combination of Baker Hughes and GE’s (GE) oil and gas business. You can read more on BHGE in Market Realist’s Baker Hughes’s Weakness despite Synergy Opportunities.

Weatherford International (WFT) ranks second lowest in terms of free cash flow generation in 3Q17. You can read more on WFT in Market Realist’s Weatherford’s Stock, Value Drivers, and Debt Concerns.

Nabors Industries (NBR), which provides drilling and rig services to upstream energy companies, comes in third in the lowest FCF rankings of these OFS companies. NBR comprises 1.8% of the VanEck Vectors Oil Services ETF (OIH). OIH has fallen 24.0% in the past year versus the 60.0% fall in NBR’s stock price, the 22.0% fall in WFT, and the 29.0% decline in BHGE’s stock price during the same period.

Although U.S. Silica Holdings (SLCA) and Patterson-UTI Energy (PTEN) feature in the bottom five list of OFS generation in the OFS industry, their FCF generations were marginally negative in 3Q17. PTEN ranks fourth, and SLCA ranks fifth. SLCA produces and sells commercial silica. PTEN provides onshore contract drilling services to the upstream energy companies.

Next, we will analyze Baker Hughes, a GE Company’s free cash flow and capex.


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