Dril-Quip Inc

RPC Inc.’s internal cash generation was adequate to cover its external obligations in 2015. Dril-Quip internal cash generation was more than adequate.

Baker Hughes reported that US crude oil rigs were flat at 863 on July 6–13. The rigs have risen by 98 or ~12.8% year-over-year.

On April 6, 2016, the U.S. Department of Justice (or DOJ) filed an antitrust lawsuit that proposed blocking the pending Baker Hughes–Halliburton merger.

Since 2013, Dril-Quip’s (DRQ) net debt has been negative, as the company has had no debt and positive cash and equivalents.

Approximately 78% of Wall Street analysts tracking Halliburton rate it a “buy” or some equivalent.

In this series, we’ll analyze the top five OFS (oilfield equipment and service) companies by net debt-to-equity ratio in fiscal 2017.

Approximately 79% of the Wall Street analysts tracking Patterson-UTI Energy (PTEN) have recommended a “buy” or some equivalent as of May 15.

According to its report on December 7, 2015, the EIA expects crude oil production to fall at five key shales by January 2016.

Dril-Quip’s quarterly revenues and earnings have deteriorated in the past four quarters due to energy price depression and weak demand for OFS products and services.

In the year preceding fiscal 3Q15, Noble Corporation’s revenue was steady. From fiscal 3Q14 to fiscal 3Q15, Noble’s revenues increased 53%.

As of July 25, the day TechnipFMC released its Q2 2018 earnings, approximately 67% of Wall Street analysts tracking TechnipFMC rated it a “buy” or some equivalent.

From April 17 to July 17, the percentage of analysts recommending a “buy” or some equivalent for WFT has increased from 69.0% to 73.0%.

From Q1 2017 to Q1 2018, Weatherford International’s (WFT) EBITDA margin increased from 6.2% to 10.6%.

From June 18–20, Archrock (AROC) was at the top of the list of gainers in the oilfield services group.

Of the analysts tracking Baker Hughes, a GE company (BHGE), on April 10, 2018, ~47% recommended “buy” or some equivalent and ~53% recommended “hold.”

In the week starting March 5, 2018, Superior Energy Services (SPN) is the top gainer in the oilfield services group.

In the week starting November 27, 2017, Flotek Industries (FTK) is at the top of the list of gainers from the oilfield services group.

In the week ending September 8, 2017, Carbo Ceramics (CRR) was at the top of the list of gainers from the oilfield services group.

RPC (RES) released its fiscal 2Q16 financial results on July 27, 2016. Robust service intensity helped earnings exceed analysts’ estimates.

Approximately 69% of analysts tracking Weatherford International recommend a “buy,” while ~23% recommend a “hold.” The rest recommend a “sell.”

In 1Q16, Dril-Quip’s (DRQ) net debt-to-EBITDA multiple stood at -1.6x, which shows a decline from its multiple of -1.16x in 1Q15.

The correlation coefficient between Weatherford International’s stock price and crude from June 2015 to now is the lowest among our four OFS companies.

Dril-Quip’s EV, when scaled by TTM adjusted EBITDA is the lowest in our group of four OFS companies after 1Q16.

All four of our select OFS companies—Weatherford International, Core Laboratories, Dril-Quip, and RPC, Inc. (RES)—recorded YoY revenue declines in 1Q16.

As of March 31, 2016, Patterson-UTI Energy had a $65 million debt under a senior unsecured term loan.

C&J Energy Services (CJES) provides completion and production services for upstream energy producers.

In 12 out of the past 13 quarters until 1Q16, Dril-Quip generated positive free cash flow.

Forum Energy Technologies (FET) released its 1Q16 financial results on April 28. The company recorded total revenues of ~$159.4 million in 1Q16, down ~54% from $348.1 million recorded in 1Q15.

FMC Technologies released its 1Q16 results on April 26, 2016. It recorded total revenue of ~$1.2 billion, a fall of ~29% from $1.7 billion in 1Q15.

National Oilwell Varco’s price-to-earnings multiple was range-bound between 2009 and 2015. In 2015, NOV’s adjusted earnings fell 53% compared to 2014.

National Oilwell Varco, which designs, manufactures, and sells equipment and components used in upstream energy production, has had a weak run recently.

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.

In 11 of the past 12 quarters until fiscal 4Q15, Dril-Quip generated positive free cash flow. Lower CFO combined with similar capex led to FCF decreasing 40% in the past one year.

Forum Energy’s net debt-to-TTM-EBITDA ratio decreased gradually from fiscal 3Q13 to F3Q14. During this period, total debt decreased 21%, and cash and marketable securities more than doubled.

The EIA expects aggregate crude oil production at the seven key shales to fall 3.3% by March 2016 compared to January 2016 levels.

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

The EIA expects crude oil production to fall at five key shales by December, whereas it forecasts a rise at two other key shales.

The EIA expects crude oil production to slow down at most of the key US shales by November. It expects production to fall at five key shales and rise at two others in October.

According to its Drilling Productivity Report released on September 14, 2015, the EIA expects the crude oil production to fall at five key shales in October.

According to its Drilling Productivity Report released on July 13, 2015, the EIA expects key shale crude oil production to decrease at four key shales in August and increase at three others.