Cameron International Corp

Economist Karr Ingham expects that two-thirds of the Texas rigs at work will be laid down. That’s about 600 rigs if the price of crude oil stays low.

Schlumberger expects drilling activity headwinds to continue in 2015. Lower E&P activity and declining rig count should also hurt other drilling equipment and service providers.

Cooperman seems to be following the trend of other other hedge funds such as Third Point and Paulson to capitalize on consolidation in the telecom space.

Cameron International’s (CAM) Subsea segment showed signs of recovery in fiscal 3Q15 after reporting falling revenue in three consecutive quarters.

Shares of Flowserve (FLS) currently trade at a PE (price-to-earnings) value of 17.04x. This isn’t cheap compared to FLS’s peers.

Decent 1Q16 revenues sent Flowserve’s shares to a high of $49.52 in early trading. The stock closed at $48.81, 2.9% higher than its opening price of $47.42.

OIH is a good proxy for playing energy prices because the fortunes of OFS companies tend to be closely linked to those of upstream, or exploration and production, companies.

Schlumberger and Cameron are contemplating a merger because their drilling and production systems would be integrated from “pore to pipeline.”

Schlumberger (SLB) is set to announce its 3Q15 earnings after the market closes on October 15, 2015. Since January 1, SLB has slightly outperformed the OFS industry and some of its peers.

Omega Advisors opened a new 1.36% position in Intercontinentalexchange (ICE), a leading operator of global markets and clearing houses, in the fourth quarter.

Cameron (CAM) provides oil drilling equipment to the oil and gas industry via four business segments: Subsea, Surface, Drilling, and Valves & Measurement, or V&M.

Roper Technologies’ (ROP) Industrial Technology segment has long lead times and provides highly engineered custom-configured products.

Visa Inc (V) issued A1/A+ rated high-grade bonds worth $16.0 billion via six parts. This included $1.75 billion in 1.20% two-year notes at a spread of 30 bps.

During the week ending May 1, 2015, the US land-based, or onshore, rig count fell by 27—compared to the previous week’s count.

In 4Q14, earnings before tax (or EBT) from Schlumberger’s international operations increased 3.8% to $1.98 billion from $1.91 billion in 4Q13.

In the last year, the US onshore rig count has fallen by 498. In contrast, the number of offshore rigs decreased by four.

Equinix Inc. (EQIX) accounted for a 4.33% position, according to JANA’s 3Q 2013 portfolio. The investor letter stated the fund started building its position late in the second quarter.

While Schlumberger can expect a 11% sequential revenue fall in 2Q15, Halliburton (HAL) is looking at a 17% quarter-over-quarter fall in 2Q15 revenue.

The VanEck Vectors Oil Services ETF (OIH) lost ~1.2% in the week to June 12. OIH tracks an index of the top 25 US listed OFS companies.

During the week ended July 31, 2015, the US onshore rig count fell by five over the previous week’s count.

In this article, we will look at Schlumberger’s first-quarter earnings in more detail and discuss the factors that affected net income.

Brent crude oil (USO) fell by nearly 5% to $48.4 per barrel on June 24, 2016. The fall happened after the results of the Brexit vote were announced.

Helmerich & Payne increased its dividend from fiscal 2009 through fiscal 2015. In fiscal 2015, its DPS increased 13% YoY to $2.75.

OFS companies are impacted by rig counts and energy prices. In the past year, WTI crude oil prices fell ~12%. Crude oil prices have fallen since June 2014.

Baker Hughes increased its dividend from fiscal 2013 through fiscal 2015. In fiscal 2015, Baker Hughes’ dividend per share increased by 6.3% to $0.68 compared to $0.64 per share dividend in fiscal 2014.

Halliburton’s net-debt-to-EBITDA multiple is higher than its peer group average. A higher multiple could indicate insufficient cash to repay debt.

Dril-Quip’s historical valuation, expressed as EV-EBITDA multiple, was moving in a range from fiscal 2009 to fiscal 2013 before it fell in fiscal 2015.

Approximately 78% of the analysts tracking Baker Hughes (BHI) recommended a “buy” or an equivalent rating. Approximately 19% recommended a “hold.”

The higher DPS and lower share price caused Schlumberger’s dividend yield to rise from 1.87% as of December 31, 2014, to 2.79% as of February 29.

Cameron International is the only company in our group that reported positive fiscal 4Q15 net income. Its fiscal 4Q15 net income fell 51% to $125 million.

Recently, there were no upgrades or downgrades issued by Wall Street analysts for the top five oilfield services companies.

Cameron International has done better than most of its peers in the stock market in the past year. Since February last year, its stock has returned 40%.

The EIA estimates that Utica Shale natural gas production reached ~3.2 Bcf (billion cubic feet) per day in January 2016. That’s ~2.2% more than production in December 2015 and 54% more than production in January 2015.

From fiscal 4Q14 to 4Q15, all of Cameron International’s (CAM) segments recorded lower revenues. The Valves and Measurement segment suffered the biggest revenue decline.

The EIA estimated that the Marcellus Shale’s natural gas production totaled ~15.6 Bcf (billion cubic feet) per day in December 2015.

Cameron International’s YTD returns have been higher than those of the industry ETF OIH.

Cameron International’s (CAM) management thinks that its operating income margin in all segments will stay pressured in fiscal 4Q15.

The EIA calculates that the average Marcellus Shale rig added production of 8.7 million cubic feet of natural gas in November 2015,

Schlumberger (SLB) has had a fair run in the stock market so far in 2015. On November 20, 2015, SLB was trading at $77.15, which was 8% lower than its price at the beginning of the year.

The stock market’s two-day rally stalled on November 4 after Janet Yellen, the Federal Reserve chair, commented about a possible rate hike in December 2015.

In the 12 months ended October 2, 2015, the US onshore rig count fell by 1,082, or 58%. The count decreased the most in Texas, where 60% of rigs shut down.

The Material Adverse Effect Clause in the Cameron-Schlumberger merger has several exceptions, including changes to the economy or financial market in general.

In the Cameron-Schlumberger OneSubsea joint venture, there’s a disproportionate effect clause addressing carve-outs that affect either company in a disproportionate way.

Schlumberger (SLB) provides technology, project management, and information technology services to the oil and natural gas exploration and production industry.

During the week ended September 25, the US onshore rig count fell by six from the previous week’s count. In the last five weeks, 48, or 6%, of onshore rigs have been idled.

OneSubsea’s importance can be best seen in its activity since the beginning of this year. But Cameron’s order backlog was down by 12% at the end of 2Q15.

The Material Adverse Effect Clause in the Cameron-Schlumberger merger has several exceptions, including weather-related events such as natural disasters.

During the week ended September 11, the US onshore rig count fell by 14 from the previous week’s count. Last week, there were 817 land-based rigs, including four inland water rigs.

During the week ended September 4, the US onshore rig count fell by 16 from the previous week’s count. Last week, there were 831 land-based (or onshore) rigs.

Schlumberger’s operating performance declined more than Cameron’s in 1Q15 and 2Q15—Cameron has managed to steady its ship better than Schlumberger has.

By merging with Cameron, Schlumberger believes it can create a company with a more attractive offering.

The financial terms of the Schlumberger-Cameron merger hold that Cameron shareholders would own ~10% of the entity. Cameron traded at a ~4.8% discount.

On August 26, 2015, Schlumberger, the world’s largest OFS company by market capitalization, disclosed that it will acquire Cameron International.

Until now, energy drilling firms were offering bonds for postponing a cash deficit. These firms could witness greatly reduced access to debt capital markets.

Cameron has a non-solicitation agreement with a fiduciary-out provision.

Schlumberger (SLB) is buying Cameron (CAM) for a combination of cash and stock.

The energy sector was the sole gainer on August 31. This move was largely triggered by the soaring oil prices and the fall in the US oil inventory.

Energy ETFs such as the Energy Select Sector SPDR ETF (XLE) and the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) posted weekly gains last week.

The United States Oil Fund (USO) was the biggest gainer in the week ended August 28. The fund rose by 12.47%.

During the week ended August 28, 2015, the US onshore rig count fell by six from the previous week’s count.

During the week ended August 21, 2015, the US onshore rig count increased by four from the previous week’s count.

Eight new projects are expected to start in the Gulf of Mexico in 2015. This could explain the sharp rise in offshore rigs we’ve seen over the last couple of weeks.

The US onshore rig count was on a continuous slide until the week ended May 22, having fallen for 25 straight weeks. The onshore count seems to have bottomed out since then.

On July 16, Halliburton (HAL) announced a $0.18 dividend per share payment for 2Q15, unchanged from 1Q15.

In this post, we’ll discuss Halliburton’s 2Q15 revenues and earnings versus analysts’ consensus estimates in depth.

The deterioration in Schlumberger’s 2Q15 earnings resulted from decreased North American land activity.

In the week ending July 10, 2015, the US offshore rig count rose by two to 31, compared to the previous week.

During the week ending July 2, 2015, the US land-based, or onshore, rig count rose by two from the previous week’s count. Last week, there were 833 onshore rigs.

During the week ending June 26, the US onshore rig count rose by one from the previous week’s count. Last week, there were 831 onshore rigs.

Large-cap energy stocks with above-average margin growth mostly outperformed peers last week.

During the week ending June 19, 2015, the US land-based, or onshore, rig count didn’t change from the previous week’s count—there were 830 land-based rigs.

The Energy Select Sector SPDR Fund (XLE) is primarily composed of large-cap stocks.

The rise in price-to-earnings ratios is indicative of investor preference towards storage during contango oil and gas markets.

Crude oil prices are feeling the pressure as the US dollar rises and expectations linger over whether oil production will stay high with OPEC. This is a reason to worry about oversupply.

Halliburton has been the best performer in the group since June 1, 2012. It returned 57.5%. During the same period, Schlumberger returned 53%.

During the week ended May 15, 2015, the US land-based, or onshore, rig count fell by six from the previous week’s count.

During the week ending April 24, 2015, the US land-based or onshore rig count fell by 23—compared to the previous week’s count.

Last week was the 20th straight week that the onshore rig count declined. Texas lost 29 rigs, while Oklahoma lost five rigs.

In the week ended April 17, US onshore rig count fell by 34 compared to the previous week, falling to its lowest level since July 31, 2009.

The horizontal rig count fell by 29 for the week ended April 17, 2015, from the previous week’s count. This represents the 21st straight week of decline.

During the week ending March 13, 2015, the US onshore rig count fell by 64 compared to the previous week’s count.

Falling crude oil prices have affected US onshore rigs the most. Some of the unconventional resource shales have higher exploration and production costs.

During the week ending February 13, 2015, the US onshore rig count fell by 100 compared to the previous week’s count.

Since the last quarter of 2014, the crude oil price fall has led to spending cuts by some major energy upstream players. Energy prices can hurt Halliburton.

In its segments and regions, HAL earned ~38% of its revenues in 4Q14 from its Drilling and Evaluation segment and 62% from Completion and Production.

In November 2014, Wayfair declared its quarterly results and reported revenues of $336.2 million, an increase of 41.2% year-over-year and above what analysts had expected.

Mohawk Industries (MHK) entered into a definitive agreement earlier this month to acquire IVC Group, which is a leading manufacturer of sheet vinyl, luxury vinyl tile (or LVT), and laminate.

In order to increase its bottom line and decrease its carbon footprint, Mohawk is focusing on optimizing overall energy consumption.

Mohawk Industries produces floor covering products for residential and commercial applications in North America and Europe.

In the last year, the onshore US rig count has fallen by 142. In contrast, the number of offshore rigs decreased by two.

Viking Global Investors has reduced its stake in Illumina by 461,100 shares. The reduction is marginal, which suggests Viking Global is positive in regards to the company’s performance.

During the week ending January 2, 2015, the US onshore rig count fell by 26 compared to the previous week’s count.

Halliburton estimates the combined company will increase shareholders’ value through dividends and share repurchases.

Viking Global Investors sold its position in Constellation Brands (CAM) in 3Q14. The position accounted for 1.27% of Viking’s 2Q portfolio.

Viking Global Investors is a global investment firm managing more than $20 billion in capital across long-short equity and long-only strategies.

The operating margin is a company’s ability to generate profits from operations. NOV’s operating margin shows the most encouraging sign yet.

CFF is a key “intermediary” between a company and its sources of capital. It shows cash returned to shareholders through share repurchases and dividends.

A company’s cash flow from operations is the cash it earns from its business operations—the sale of products and services.

Omega Advisors initiated a new 1.50% position in SunEdison Inc (SUNE). SunEdison is a major developer and seller of photovoltaic energy solutions.

Gaming and Leisure Properties (GLPI) is a new position initiated by Omega Advisors last quarter. Gaming and Leisure Properties is the first gaming-focused REIT, which was spun off from Penn National Gaming (PENN).