Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: wolfdog2 who wrote (25866)	7/16/1998 11:53:00 AM
From: BOGEY	Read Replies (1) \| Respond to of 95453

Thread....News Item..Higher earnings seen for shunned oil service firms Reuters, Thursday, July 16, 1998 at 01:04 By Andrew Kelly HOUSTON, July 15 (Reuters) - U.S. oil field service companies are expected to post double-digit earnings increases despite the lingering slump in crude oil prices, analysts said on Wednesday. Analysts have repeatedly lowered their earnings forecasts this year to reflect a reduction in oil company exploration and production budgets, much of which is spent on oil field services. But earnings for the most recent quarter and the year as a whole are still expected to be higher than year-earlier levels. Price increases implemented by service companies before the worst of the oil price gloom descended would help to buoy earnings, Dan Pickering of Simmons & Co. said. "Estimates are clearly coming down. We've had some pretty dramatic revisions in the past six weeks but the absolute numbers at this point still show growth," he said. Four big oil field service companies will report earnings over the next two weeks: EVI Weatherford Inc. (NYSE:EVI), Schlumberger Ltd.(NYSE:SLB), Halliburton Co. (NYSE:HAL), and Baker Hughes Inc (NYSE:BHI). According to research service First Call Corp., Wall Street analysts are projecting double-digit earnings rises for all but Baker Hughes, which analysts say has been hit more immediately by low oil prices because a higher share of its sales consist of "consumables" such as drill bits and mud. The First Call consensus figures show all four companies currently are expected to post double-digit earnings growth for the year as a whole and further profit increases in 1999. As a group, oil field services stocks were among fund managers' favorites in 1997. Schlumberger, Halliburton and EVI all outpaced the 31 percent rise in the S&P 500 index last year with share price appreciation of 61 percent, 72 percent and 103 percent, respectively. But that has changed this year with most services stocks showing losses while the S&P 500 has continued its ascent. Despite a mini-rally in recent days, Schlumberger's stock is down more than 13 percent so far this year and Halliburton's off over 18 percent while the S&P 500 is up over 21 percent. Analysts said investors had lost confidence in the sector as successive recoveries in oil prices proved short-lived. "Investor sentiment towards the group is horribly negative," said James Wicklund of Dain Rauscher Inc. Wicklund said investors had probably overreacted, arguing that the current oil supply glut was far smaller than that in the mid-1980s. Wicklund foresees a firming of oil prices by the end of the year due to seasonal demand and recently agreed production cuts. "Investors are looking for that before they really buy back into these stocks," he said. Pickering said he also expected to see stronger oil prices by the late third quarter or fourth quarter of this year, which would benefit oil field service companies. "We are looking for a rebound in energy fundamentals, which is going to translate into stronger activity," he said. Asked about his favorite stocks in the oil field services sector, Pickering said EVI was "far and away the cheapest" based on his estimate of 1999 earnings. Wicklund said he had a 'hold' rating on the larger companies and currently favored niche oil field service players such as Core Laboratories (NYSE:CLB) and Hanover Compressor (NYSE:HC). COMPANY EARNINGS EXPECTED FIRST CALL CONSENSUS EPS Latest Qtr YR 1998 EVI Weatherford Q2 July 16 $.065 vs 0.42 $2.71 vs 1.81 Schlumberger Q2 July 21 $0.69 vs 0.60 $2.88 vs 2.52 Halliburton Q2 July 22 $0.50 vs 0.40 $2.18 vs 1.75 Baker Hughes Q3 July 24 $0.45 vs 0.46 $1.87 vs 1.68