Ranking the 5 Worst OFS Companies by Market Returns in 2018

YTD returns

So far in 2018, many companies in the OFS (oilfield equipment and services) industry have had negative returns in the stock market. In this series, we’ll analyze the companies in the OFS industry with the five worst YTD (year-to-date) stock market returns—excluding offshore drillers. We selected companies in the OFS industry with a market capitalization of over $100 million. We already discussed the best OFS companies by YTD returns in Top 5 Oilfield Companies Based on 2018 Returns.

Ranking the 5 Worst OFS Companies by Market Returns in 2018

Five worst OFS companies

As of March 14, 2018, Weatherford International (WFT) has seen the steepest YTD fall in stock prices in the OFS industry. Weatherford International provides equipment and services used in drilling, evaluation, completion, production, and intervention in the upstream energy industry. Compared to Weatherford International’s -34.5% YTD returns, the VanEck Vectors Oil Services ETF (OIH) has witnessed -5.4% returns YTD. OIH tracks an index of 25 OFS companies.

CARBO Ceramics (CRR) saw the second-steepest decline in stock prices in the OFS industry. YTD, CARBO Ceramics’ stock price has decreased 26.3% until March 14, 2018. CARBO Ceramics, through its Oilfield Technologies and Services segment and Environmental Products and Services segment, provides equipment and services to the upstream energy industry and the industrial market. In comparison, the SPDR S&P Oil & Gas Equipment & Services ETF (XES) saw -10.3% returns during the same period. XES tracks an index comprised of companies in the oil and gas drilling subindustry and the oil and gas equipment and services subindustry.

RPC (RES) provides equipment, technical services, and support services to the oil and gas industry. RPC is ranked third in terms of the lowest YTD stock market returns in the OFS industry. RPC’s stock price has decreased 21.8% YTD as of March 14.

Fairmount Santrol Holdings (FMSA) and U.S. Silica Holdings (SLCA) are also on the list of the five worst underperformers in the OFS industry. Fairmount Santrol Holdings has decreased ~19% YTD, while U.S. Silica Holdings has fallen 18.8% as of March 14. Fairmount Santrol Holdings provides sand-based proppant solutions to energy producers through its Proppant Solutions and Industrial and Recreational Products segments. U.S. Silica Holdings produces and sells commercial silica, which energy producers use as fracturing sand. The silica is also used in industrial application.

Why did the returns vary?

Beginning in 2018, many of the OFS companies’ management indicated that the price of their offerings improved based on higher exploration and production activities in the upstream industry. The OFS industry’s earnings remain under pressure because services and equipment are in oversupply. However, there’s a gradual shift as producers increase exploration and production activities. Despite West Texas Intermediate crude oil price’s marginal YTD recovery, the US rig count has increased 6% in 2018.

OFS companies’ revenues and profitability usually improve when upstream companies’ exploration, drilling, and production increase—depending on the OFS companies’ business models. To learn more, read Comparing SLB, HAL, BHGE, and NOV after 2017.

Next, we’ll compare Weatherford International’s YTD returns with market indicators. We’ll also analyze Weatherford International’s fundamental metrics.