Seeking Alpha: Weatherford Slowly Changing The Tone

To be clear from the outset, Weatherford (NYSE:WFT) has given investors ample reason over the years to hate the management and have nothing to do with the stock. It's likewise entirely fair to say that a leader who presided over the making of an epic mess is rarely the person to lead the company out of it.

That said, I believe there is more than a little stubbornness out there regarding Weatherford and I believe that ignoring the cost and management improvements made by the company is a mistake. The current state of the North American onshore market is lousy, but I had already expected that, and I still believe that Weatherford shares ought to trade closer to the mid-teens. There is most definitely a real risk that the onshore market(s) stay weaker for longer, but I likewise believe there is an opportunity for a new and improved Weatherford to emerge as a viable new Top Three player in a market that wants one.

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Weatherford Slowly Changing The Tone

Seeking Alpha: Superior Energy Searches For Opportunity Amid Adversity

There is still no clear sign that the U.S. onshore energy market has bottomed, nor that global energy prices are likely to head meaningfully higher quickly. With abundant overcapacity across multiple service areas, Superior Energy (NYSE:SPN) is looking at a long, hard, and painful slog through this weak part of the cycle.

The good news is that the bad times won't last forever - at a minimum, there are too many over-leveraged service providers accepting almost any price to keep the lights on and their business models aren't viable on a long-term basis. Superior Energy has no such concerns for the foreseeable future and has instead been pursuing a strategy of preserving key customer relationships and assets while searching for M&A opportunities that could leave it as a more viable back-up choice when the Big Three become the Big Two after the Halliburton (NYSE:HAL) - Baker Hughes (NYSE:BHI) merger.

Sell-side analysts have made multiple cuts to their estimates for Superior as 2015 has gone on and I wouldn't be surprised if there are further cuts still to be made. At a more fundamental level, though, I believe these shares offer some solid long-term upside. A range of methodologies (cash flow, EV/EBITDA, and ROE/BV) supports a fair value range of $22.50 to over $30, all of which suggest upside for investors willing to hold through what will almost certainly be a few more rough quarters if not a protracted recovery period.

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Superior Energy Searches For Opportunity Amid Adversity

Seeking Alpha: Surprisingly Strong Margins Bode Well For Cameron

Across the energy sector, companies, investors, and analysts are pretty much ensconced in their storm cellars and just waiting to see how bad things get before somebody blows an "all clear". To be sure, the results and industry commentary posted by the likes of Schlumberger (NYSE:SLB) and Halliburton (NYSE:HAL) has been consistent with a sharp pullback in North American onshore activity and a bleak outlook.

But that's not the totality of the story. Both Cameron (NYSE:CAM) and FMC Technologies (NYSE:FTI) reported relatively more positive prospects than expected, with subsea orders holding up better than expected. Although Cameron's drilling and valves segments have seen a sharp fall-off in activity, margins were notably stronger than expected and Cameron's diversified equipment model may help it steer through this downturn better than the Street presently expects.

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Surprisingly Strong Margins Bode Well For Cameron

Seeking Alpha: Weatherford Still Pinning Its Hopes On Better Performance

Say this much for Weatherford (NYSE:WFT) - expectations had gotten tamped down enough that the stock has actually managed to outperform peers like Schlumberger (NYSE:SLB), Halliburton (NYSE:HAL), and Baker Hughes (NYSE:BHI) since my last piece. Of course, stretch that comparison out over time, and Weatherford emerges as a notable laggard. This underperformance was well-deserved, as the company consistently posted underwhelming performance from a business that was pretty much structurally incapable of doing well (by virtue of being more focused on more competitive and/or lower value-added segments).

This was supposed to be a new beginning for a leaner, better-focused Weatherford, but then the North American onshore market had its legs swept out from under it by a sudden and significant drop in oil prices. So here we are, looking at first quarter earnings, where Weatherford once again missed, and contemplating the future. I continue to believe that the company is undervalued, even if it takes until 2018 for profits to recover to last year's level, and I believe that ignores the potential upside of a business that may be more stable than believed, and better able to grow when oil prices and activity levels recover.

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Weatherford Still Pinning Its Hopes On Better Performance

Seeking Alpha: Weatherford Fixing Its Credibility Gap, But Now Market Conditions Weigh Heavily

Things were going pretty well for Weatherford (NYSE:WFT) six months ago. Management was making real progress with its efforts to streamline the business and reduce costs and talk of substantial free cash flow generation was just what Wall Street wanted to hear.

And then it all went south. Management communication issues over its free cash flow guidance brought back bad memories for a lot of investors and the steep fall in oil prices has gutted E&P budgets for 2015 and expectations for earnings in the oil services sector.

I continue to believe that Weatherford is a legitimate self-improvement story. While the sharp decline in oil prices will lengthen the timeline to meaningful cash flow, management has continued to make good decisions with respect to the company's cost base and business mix.

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Weatherford Fixing Its Credibility Gap, But Now Market Conditions Weigh Heavily

Seeking Alpha: Has All The Bad News Been Baked Into RPC's Price?

Superior quality can help a company through hard times, and energy services provider RPC (NYSE:RES) has held up better than companies like Basic Energy (NYSE:BAS), Key Energy (NYSE:KEG), and C&J Energy Services (NYSE:CJES), but a 40% drop in six months is still harsh. What's more, I think it's anybody's guess as to whether estimates have gone low enough to accurately reflect this downturn in the cycle - even RPC's management doesn't believe it has much visibility as to the depth or duration of the downturn.

I expect that RPC will emerge from this downturn in good condition and maintain its reputation as one of the highest-quality small cap service providers. While RPC shares should do better if/when the market believes it has overcorrected (and/or if the company's Permian-centric pressure pumping business holds up better than expected), but I don't expect RPC to offer the same sort of leverage to improving sentiment as Basic Energy or Key Energy would. On the other hand, I am confident in RPC's ability to withstand a prolonged downturn while its more debt-laden peers may not.

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Has All The Bad News Been Baked Into RPC's Price?

Seeking Alpha: Cameron's Parting Shot Before The Deluge

"There's a storm comin'; You'd better run." Richard Hawley, There's A Storm a Comin'

Maybe the nicest thing to be said by oil/gas equipment company Cameron (NYSE:CAM) is that it has finally managed to get its house in order … right as a hurricane bears down on the sector. If investors are worried about the exposure of companies like Dover (NYSE:DOV) and Honeywell (NYSE:HON) to oil and gas production companies, you can probably imagine the concern for the equipment manufacturers like Cameron, National Oilwell Varco (NYSE:NOV), and FMC Technologies (NYSE:FTI).

Cameron serves customers across a range of markets and their exposures to oil/gas prices are not all the same. With that, the company is going to be delivering revenue out of its backlog in 2015 and likely doing so at decent margins. Offsetting that is the risk that the cycle could drop even further before reaching bottom and could take away Cameron's ability to grow earnings for two or more years. It's probably too early to start dumpster-diving (unless you expect a significant turnaround in oil prices over the next six to twelve months), but if you've held on to Cameron shares at this point, the best strategy may be to ride it out as the company has been gaining share in unconventional drilling and can still drive meaningful long-term value out of its OneSubsea JV with Schlumberger (NYSE:SLB).


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Cameron's Parting Shot Before The Deluge

Seeking Alpha: 2 More Positive Steps For Cameron International

It's only been about a month since Cameron International (NYSE:CAM) posted a generally solid set of quarterly results, but the company has kept busy in the meantime. A new alliance between the Cameron-Schlumberger (NYSE:SLB) OneSubsea joint venture and Helix Energy Solutions (NYSE:HLX) looks like a good long-term opportunity, while the sale of the centrifugal compression business to Ingersoll Rand (NYSE:IR) largely completes the company's restructuring efforts and should allow a near-total focus on operations, not to mention bringing in capital for more buybacks. I don't think Cameron is cheap today, but I do like these steps forward and believe the company is well-placed to take advantage of a long offshore cycle.

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2 More Positive Steps For Cameron International

The Motley Fool: Weatherford International Rebuilding Trust, but Needs to Rebuild the Business

For a company with a long and unfortunate history of disappointing its shareholders, Weatherford International has come back strong on the back of a comprehensive turnaround and restructuring plan that is seeing the company sell or spin off lower margin and less competitive businesses. Weatherford is by no means finished with this process and still needs to prove that it can maintain its leadership in areas like tubular running, cementation, and artificial lift as well as improve operations like pressure pumping. Even so, and despite a good run over the past year, these shares still hold some appealing upside.

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Weatherford International Rebuilding Trust, but Needs to Rebuild the Business

Seeking Alpha: Cameron Showing Some Much-Anticipated Margin Progress

Owning Cameron (NYSE:CAM) shares hasn't always been the easiest investment play, as these shares have delivered plenty of volatility in response to order flow and margin progress (or lack thereof). Management dug itself into a hole on the margin side with inadequate production capacity, but that issue seems to be on its way to a strong resolution. Cameron has also regained a lot of momentum in the subsea market and the joint venture with Schlumberger (NYSE:SLB) should continue to pay off in opening doors to new business.

The issue with Cameron shares typically comes down to timing. Cameron should be looking at several years of good revenue and margin/FCF performance as it delivers on its large order book. At the same time, I believe we are looking at an extended cycle as more and more energy companies go offshore to find production growth. Discounted cash flow unsurprisingly isn't a lot of help, but the difference between a 9x and 10x EBITDA multiple on the shares swings the fair value by almost $9.

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Cameron Showing Some Much-Anticipated Margin Progress

Seeking Alpha: More Addition By Subtraction At Weatherford

I've long been fond of the expression "if it doesn't make dollars, it doesn't make sense," and I'm glad to see that Weatherford (NYSE:WFT) has gotten serious about adopting a similar philosophy. Back in March, the company sold its pipeline and specialty service business to Baker Hughes (NYSE:BHI) and before that the company sold its Russian ESP business for about $400 million. Now Weatherford has sold its Russian and Venezuelan drilling rigs and in doing so not only got a decent price but also improved the prospects for its drilling rig IPO. Weatherford has done quite well on the back of increasing optimism around energy services and for its specific restructuring opportunities and there is still more upside from here.

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More Addition By Subtraction At Weatherford

Seeking Alpha: Amidst Restructuring Efforts, Weatherford Still Thinking About Growth

Energy services company Weatherford (WFT) has come a long way since my February 2013 piece, with the company not only putting tax and accounting issues behind it, but also moving forward with a sizable restructuring effort. Weatherford is selling, spinning off, or shutting down non-core operations where either the company's market position or margin potential isn't good enough to warrant ongoing operations.

Amidst these turnaround efforts, though, the company is not ignoring the need to keep the company in position for future growth.

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Amidst Restructuring Efforts, Weatherford Still Thinking About Growth

The Motley Fool: The Clouds Are Parting for Weatherford International

The first-quarter earnings report for the fourth-largest energy services provider, Weatherford International (NYSE: WFT  ) , was not flawless in terms of growth or margins. What was, and is, more important is that the company has very clearly put itself on a path of serious self-improvement and is remaking itself into a high-margin provider of services with relatively little overlap with the big three -- Schlumberger (NYSE: SLB  ) , Halliburton (NYSE: HAL  ) , and Baker Hughes (NYSE: BHI  ) .

With this progress, the penalty to Weatherford's earnings before interest, taxes, depreciation, and amortization multiple no longer seems as appropriate, and these shares continue to look undervalued as an improving play on unconventional reservoirs.

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The Clouds Are Parting for Weatherford International

Seeking Alpha: Superior Energy Services Needs U.S. Land To Turn

Investors have gotten quite a bit more bullish about prospects for the energy service companies over the last three to six months, largely due to increased optimism that U.S. land conditions really are improving. That should be good news for Superior Energy Services (SPN), as should the signs that deepwater Gulf of Mexico activity is turning around. The real question for Superior, though, is whether the company can better leverage its "integrated lite" operating structure and start delivering better returns for shareholders.

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Superior Energy Services Needs U.S. Land To Turn

The Motley Fool: Stormy Weatherford International Ltd Moving in the Right Direction

If you own shares of Weatherford (NYSE: WFT  ) , there have likely been many occasions that left you scratching your head and wondering, "what possessed me to do that?" To management's credit, though, it is no longer pursuing a strategy of bigger-must-be-better and is instead examining where the company's core competencies and profit opportunities really lie.

The second half of 2013 was volatile and largely disappointing as the company missed margin and cash flow generation guidance. This next year is likely to be challenging as well, as the company looks to enact a large headcount reduction as well as the sale/spinoff of multiple non-core businesses. Weatherford's many self-inflicted wounds have obscured that it does in fact do many things well, and investors looking to play a still-undervalued turnaround story in oil services may want to check this one out.

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Stormy Weatherford International Ltd Moving in the Right Direction

Seeking Alpha: RPC Needs Activity To Pick Up To Sustain The Rally

Many investors are already looking ahead to 2014, and it's probably just a matter of weeks before we start seeing the "stocks to own for 2014" pieces coming out. As it pertains to the energy sector, one of the biggest questions is the extent to which drilling activity will pick up in North America and how much of the excess capacity in areas like pressure pumping will get absorbed into the market.

Given how stocks like RPC (RES), Halliburton (HAL), C & J Energy Services (CJES), and Calfrac (CFW.TO) have been behaving of late, it looks investors are expecting a pretty favorable answer. Although the valuation on RPC isn't so great at this point, I do believe it's a stock worthy of further due diligence. Despite overcapacity in pressure pumping, the company has maintained solid margins and returns in capital, due in part to other service offerings like downhole tools and coiled tubing.

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RPC Needs Activity To Pick Up To Sustain The Rally

Seeking Alpha: There's Still Room For Parker Drilling To Outperform

Parker Drilling (PKD) has been a public company for quite some time, but the company hasn't had what you'd call a consistent record of performance. Energy services, and drilling particular, has always been a volatile, cyclical business, but I would estimate that the company has only earned its cost of capital once or twice over the last decade. Maybe it's not altogether surprising then that the stock has stayed pretty much stuck in a band between $4 and $6 over the past four years.

These shares dipped slightly below that range in April of this year, only to exceed it slightly in July and here again more recently, but I believe these shares may yet be undervalued. Demand for drilling barges in the Gulf of Mexico has picked up, and so too has demand for rental tools (particularly for deepwater activities). At the same time, I think the company's progress with its international operations still has not been fully appreciated by the Street. Although Parker Drilling remains a "show me" story, I wouldn't be surprised if these shares trade between $8 and $9 before too much longer.

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There's Still Room For Parker Drilling To Outperform

Investopedia: Weatherford Burning Through Its Benefits Of The Doubt

Broadly speaking, there are two valid reasons to own Weatherford (NYSE:WFT). First, you believe that the company's position in markets like artificial lift, casing, and tool rental coupled with more disciplined management will lead to solid revenue and profit growth. Second, you believe that the company's process of getting its act together, including resolving tax/reporting issues, a FCPA investigation, and working capital management, will lift the penalty discount on the shares and/or prompt a buyout.

Judging by Weatherford's second quarter earnings, and the market's reaction, it seems like the second notion is in the lead. This wasn't a great quarter for the service sector, but Weatherford's quarter was pretty poor on an operating basis, and there's only just so much grace period that investors will give this management team. While I'm still content to own these shares on the basis of what I think is the underlying value to the business, the company needs to get its act together quickly.

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Investopedia: Expectations, Not Operations, Weighing On Halliburton

Going into this quarter, I had wondered whether expectations for Halliburton (NYSE:HAL) were running a little hot and whether that might set the company and stock up for a tough post-quarter reaction. I don't know whether it was the lack of major upside to second quarter numbers or management's comments that the pace of oil spill settlements has slowed, but the shares were a little soft in early trading Monday morning. Although Halliburton is not really my favorite company in the energy service space, it's hard for me to ignore the value and I believe this remains a good candidate for investors looking to play the rebound in North America and the future growth in offshore and international unconventional development.

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Investopedia: Schlumberger Leads The Way, Like It Usually Does

There are lively debates to be had about whether it's better to own the leaders or laggards as a sector bottoms, the idea being that the laggards have more to gain when conditions improve. Schlumberger (NYSE:SLB) is definitely no laggard, as the company once again delivered a set of results that confirms its leadership in multiple sectors and geographies in the energy services space. With Schlumberger doing well in North America, well-positioned in offshore/deepwater with its OneSubsea venture with Cameron (NYSE:CAM), and only beginning to take advantage of what China may have to offer, Schlumberger continues to look like a worthwhile idea in the energy space.

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