Dow Jones article:
DOW JONES NEWS SERVICE OIL SERVICES STKS UP;
ANALYST CITES SHIFT IN MKT SENTIMENT
Industry Fundamentals Seen Strong
By Charlene Oldham
NEW YORK (Dow Jones)--Several oilfield equipment
stocks were up Wednesday in what one analyst said
may be a turnaround for an industry that has been taking
some unjustified hits.
Simmons & Co. International analyst Roger Read said
several factors, including new quotas from the
Organization of Petroleum Exporting Countries,
uncertainty about Asian markets and soft commodities
prices, have hurt the group recently.
OPEC decided last week to raise its production quota
by 10%. OPEC's move sparked a plunge in oil futures
prices and oil-related stock prices. Read said
Wednesday's market activity might be a signal that
shares are recovering from that and other negative news.
"Hopefully, today they've turned the corner," Read said.
"Fundamentally, nothing has changed in these companies
- it's investor sentiment and market sentiment."
Both Read and Don Washington, of the energy services
company McDermott International (MDR), said the
positive shift in sentiment is justified.
"The fundamentals of all the markets remain strong.
Based on the fundamentals, there is no reason the stock
shouldn't come back up," said Washington, manager of
communications and investor relations for McDermott.
"I think this rebound should not be a surprise to
anybody. We do not see any change in the fundamental
outlook of the business. Based on that, we think the
sector should get stronger."
Shares of McDermott recently were trading at 32 9/16,
up 1, or 3.2%. Other gainers in the sector included
Dril-Quip Inc. (DRQ), up 2 1/4, or 7.3%, to 33;
Precision Drilling Corp. (PDS), trading at 27 13/16, up
1 3/4, or 6.7%; and Global Marine Inc. (GLM), trading
at 27 5/8, up 1 7/8, or 7.3%.
EVI Inc. (EVI) was recently trading at 53 3/8, up 3 1/2,
or 7%. Varco International Inc. (VRC) was up 3 11/16,
or 7.6%, to 52 3/8. Newpark Resources Inc. (NR) was
up 1 11/16, or 10.4%, at 17 7/8.
And as the Dow Jones Industrial Average was down
about 50 points, the Dow Jones Oilfield Equipment and
Services index of five companies was up 7.40, or 2.2%,
at 347.30 on a market-capitalization basis.
Exec Says Profit-Taking Drove Swing
And one company executive attributed some of the
recent volatility to profit-taking.
"In our sector of business, it just seems those swings are
more drastic," said J.L. Holloway, chairman and chief
executive of Friede Goldman International Inc. (FGII),
of year-end movements that are common as fund
managers ready their portfolios for review. "They've
made huge profits and they are looking to lock those in
at the end of the year."
Friede Goldman rose 4 1/2, or 14.6%, to 35 3/8. Block
volume, which records trades of more than 10,000
shares, was 125,000, compared with an average daily
block volume of 77,500.
Shares of industry peer Patterson Energy Inc. (PTEN)
also rose to 40 1/2, up 4 1/8, or 11.3%. Shares of
Smith International Inc. (SII) were up 6 1/2, or 10.4%,
to 69 1/16.
-By Charlene Oldham; 201-938-5173
smartmoney.com |
