| | | HP is a really exceptional company you can see how well the stock price has held up
Hans Christian Helmerich III is still Chairman of the Board....
Helmerich & Payne, Inc. engages in the contract drilling of oil and gas wells. It provides drilling rigs, equipment, personnel, and camps on a contract basis to explore for and develop oil and gas from onshore areas and from fixed platforms, tension-leg platforms, and spars in offshore areas. The company operates through three segments: U.S. Land, Offshore, and International Land. The U.S. Land segment drills primarily in Oklahoma, California, Texas, Wyoming, Colorado, Louisiana, Mississippi, Pennsylvania, Ohio, Utah, New Mexico, Montana, North Dakota, West Virginia, and Nevada. The Offshore segment has drilling operations in the Gulf of Mexico and Equatorial Guinea. The International Land segment conducts drilling operations in Ecuador, Colombia, Argentina, Bahrain, the United Arab Emirates, and Mozambique. As of November 12, 2015, the company operated a fleet of 344 land rigs in the United States; 38 international land rigs; and 9 offshore platform rigs. The company also owns, develops, and operates commercial real estate properties; and researches and develops rotary steerable technology. Its real estate investments include a shopping center comprising approximately 441,000 leasable square feet; multi-tenant industrial warehouse properties covering approximately one million leasable square feet; and approximately 210 acres of undeveloped real estate located in Tulsa, Oklahoma. Helmerich & Payne, Inc. was founded in 1920 and is headquartered in Tulsa, Oklahoma.
NOV is also a powerhouse....
VLO as a refiner has made a killing as refiners of petroleum make tons of money when crude prices decline since they are slow to reduce the refined prices.... it's within a few dollars of it's all time high is up from 12 in 2009 to 71 and is higher than it was when times were great in 2007 when it had a high of 60.
marketwatch.com
If you ignore the daily headlines about the beleaguered energy sector, invest in companies with low debt and wait for the inevitable rebound in oil prices, you could eventually make a lot of money.
Oil news has been grim, as analysts rush to lower their crude-price predictions week in and week out. Wolfe Research, in a shocking report, is expecting as many as a third of U.S. oil and natural gas producers to go bankrupt.
Read: Saudis making a ‘trillion-dollar mistake,’ says U.S. oil billionaire
Oil has already hit its lowest level in more than 12 years, and the drop over the past 18 months has been breathtaking. Investment banks expect crude oil prices to head well below $30. As recently as July 2014, prices topped $100 a barrel.
In an interview Friday, Bill Mann, chief investment officer of Motley Fool Asset Management, gave an example of an oilfield services and equipment company that’s well-positioned to take advantage of the turmoil in the energy and materials industries, and bounce back beautifully when oil prices recover.
“In the materials sector and oil services, there are companies that have been thrown out with the bath water, including National Oilwell Varco NOV, +1.60% ” Mann said. He called the company ”spectacular,” with a “very conservative capital structure in a disaster of a market right now.”
“The last 18 months have been the worst in history for the price of Brent crude oil LCOH6, +0.94% and those things tend to reverse in time,” he said.
National Oilwell Varco’s ratio of long-term debt to equity was 15.3% as of Sept. 30, according to FactSet. That’s the lowest among the six companies in the oilfield services/equipment subesctor of the S&P 500 SPX, +0.78% according to FactSet.
Having low debt is crucial for companies that wish to scoop up competitors or assets during a wave of bankruptcies.
Here’s how National Oilwell Varco’s year-end debt-to-equity ratio compared with the five other companies included in the S&P 500 oilfield services/equipment subsector:
| Company | Ticker | Long-term debt/ equity - Sept. 30 | Average return on equity - five years through September 2015 | Total return - 5 years through Jan. 8 | | National Oilwell Varco Inc. | BHI, -1.13% NOV, +1.60% | 15.3% | 10.4% | -44% | | Baker Hughes Inc. | BHI, -1.13% | 22.2% | 6.1% | -22% | | Schlumberger NV | SLB, -0.14% | 35.2% | 12.9% | -13% | | Halliburton Co. | HAL, -0.25% | 48.3% | 13.0% | -10% | | Cameron International Corp. | CAM, -0.22% | 67.7% | 8.7% | 23% | | FMC Technologies Inc. | FTI, -0.75% | 71.6% | 17.7% | -40% | | Source: FactSet |
To be sure, a relatively high level of debt doesn’t mean a company has been a poor long-term performer, as you can see from the five-year average returns on equity and total return figures above. The idea is that a company with low debt can take advantage of the unusual market turmoil.
Here are the 10 S&P 500 energy and materials companies with the lowest debt-to-equity ratios as of Sept. 30, according to FactSet: | Company | Ticker | Industry | Long-term debt/ equity - Sept. 30 | Average return on equity - five years through September 2015 | Total return - 5 years through Jan. 8 | | Helmerich & Payne Inc. | HP, +0.63% | Contract Drilling | 10.9% | 14.7% | 8% | | National Oilwell Varco Inc. | NOV, +1.60% | Oilfield Services/ Equipment | 15.3% | 11.4% | -44% | | Exxon Mobil Corp. | XOM, +2.05% | Integrated Oil | 16.7% | 22.3% | 13% | | Chevron Inc. | CVX, +1.71% | Integrated Oil | 17.9% | 17.0% | 7% | | Occidental Petroleum Corp. | OXY, -0.41% | Oil and Gas Production | 19.6% | 10.2% | -21% | | Baker Hughes Inc. | BHI, -1.13% | Oilfield Services/ Equipment | 22.2% | 7.5% | -22% | | Hess Corp. | HES, -5.01% | Oil and Gas Production | 27.0% | 9.7% | -42% | | Marathon Oil Corp. | MRO, -4.47% | Oil and Gas Production | 30.4% | 7.3% | -50% | | Valero Energy Corp. | VLO, +3.07% | Oil Refining/ Marketing | 30.9% | 14.2% | 248% | | Pioneer Natural Resources Co. | PXD, -0.24% | Oil and Gas Production | 31.1% | 3.9% | 32% | | Source: FactSet |
Among the 67 S&P 500 companies in the energy and materials sectors, 18 had debt-to-equity ratios of over 100% as of Sept. 30. With oil and gas revenues plunging, while interest rates are expected to rise in the U.S. during 2016, the timing of that high leverage couldn’t be worse. And those 18 are all large-cap companies. Among smaller players, there will be plenty of bankruptcies, which means plenty of distressed assets for survivors with lower leverage to acquire. |
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