Energy

Outlook for Oil Field Services Decidedly Mixed

Offshore drill rig
Thinkstock
Investment firm Sterne Agee this morning published its outlook for the oil field services sector, calling for limited upside in North American activity, improvement in international drilling, and a trend toward growth in deepwater activity.

The firm also made some changes to its ratings on services companies. Baker Hughes Inc. (NYSE: BHI) and Superior Energy Services Inc. (NYSE: SPN) were both downgraded from ‘buy’ to ‘neutral’ and FMC Technologies Inc. (NYSE: FTI) was upgraded from ‘neutral’ to ‘buy’. The price target for Baker Hughes remained at $46 a share, and the price target on shares of Superior remained at $24. EPS estimates for the years 2012 through 2014 were lowered for both firms. FMC’s price target was raised to $56.

Sterne Agee’s favorite names in the sector are FMC, Halliburton Co. (NYSE: HAL), and Schlumberger Ltd. (NYSE: SLB). Although the firm doesn’t offer any comments on either Halliburton or Schlumberger, these two companies share FMC’s international exposure and deepwater experience.

The more exposed a services company is to U.S. and Canadian drilling, the greater the potential drag on performance. Drilling for natural gas has been sharply curtailed in the U.S., while lower crude and liquids prices have slowed the growth in drilling for liquids. As things stand today, rising prices for crude, liquids, and natural gas are not in the near-term picture and appear only fuzzily in the longer term outlooks.

Sponsored: Attention Savvy Investors: Speak to 3 Financial Experts – FREE

Ever wanted an extra set of eyes on an investment you’re considering? Now you can speak with up to 3 financial experts in your area for FREE. By simply clicking here you can begin to match with financial professionals who can help guide you through the financial decisions you’re making. And the best part? The first conversation with them is free.Click here to match with up to 3 financial pros who would be excited to help you make financial decisions.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.