By Melodie Warner
TAKING THE PULSE: The U.S. energy sector has been shifting
drilling crews and heavy equipment into oil fields as prices for
natural gas hit 10-year lows. But the rapid buildup of hydraulic
fracturing capacity during the recent boom in vast shale formations
around the U.S. has lowered the prices that oil-field-service
providers can charge for their services. Oil fields are harder to
tap than natural-gas reservoirs and the rising operating costs are
cutting into profit margins. To be sure, activity in international
markets and a resurgence in the U.S. Gulf of Mexico could help to
mitigate the pressure.
COMPANIES TO WATCH:
Schlumberger Ltd. (SLB) - reports July 20
Wall Street Expectations: Analysts polled by Thomson Reuters
recently expected a profit of $1 a share on $10.41 billion in
revenue, compared with 87 cents a share and $9.62 billion,
respectively, a year earlier.
Key Issues: Strong oil-drilling activity in the U.S. and abroad
helped to drive Schlumberger's first-quarter earnings up 38%. But
the largest provider of oil-field services has warned that prices
for its pressure-pumping services in North America continue to
weaken as drilling rigs move from natural-gas fields to oil
areas.
Baker Hughes Inc. (BHI) - reports July 20
Wall Street Expectations: Analysts polled by Thomson Reuters
recently expected a profit of 77 cents a share on $5.26 billion in
revenue, compared with 93 cents a share and $4.74 billion,
respectively, a year earlier.
Key Issues: Baker Hughes's first-quarter margins were tamped
down by challenges in its North American pressure-pumping business,
and Chief Executive Martin Craighead has said he expects North
America margins for the second quarter to decline. While he
attributed the projected decline primarily to seasonality in
Canada, pricing in pressure pumping will likely continue to
decrease throughout the end of the year, he said.
Halliburton Co. (HAL) - reports July 23
Wall Street Expectations: Analysts polled by Thomson Reuters
recently expected a profit of 75 cents a share on $6.96 billion in
revenue, compared with 81 cents a share and $5.94 billion,
respectively, a year earlier.
Key Issues: Halliburton saw its first-quarter margins shrink
from the year before amid higher fracking costs and declining
demand for the service in natural-gas fields. And last month, the
second-largest provider of oil-field services warned its
second-quarter North America margins will be affected more than
previously expected by a rise in the cost of guar gum. Concerns of
potential shortages later in the year for guar--a legume whose
juices are used in hydraulic fracturing--has rapidly inflated
prices, Halliburton said.
Nabors Industries Ltd. (NBR) - reports July 25
Wall Street Expectations: Analysts polled by Thomson Reuters
recently expected a profit of 43 cents a share on $1.76 billion in
revenue, compared with 23 cents a share and $1.36 billion,
respectively, a year earlier.
Key Issues: Nabors's first-quarter profit jumped 62% on a strong
performance from its continental U.S. drilling business, despite
industry challenges. The company's U.S. offshore operations also
rebounded, swinging to a operating profit that was also better than
its fourth-quarter operating income.
The world's largest driller of onshore oil and gas is continuing
to reshape itself after acknowledging it strayed off target in its
exploration and production forays. Nabors is shedding noncore
businesses, like oil and gas properties, and plans to use those
asset sales to reduce its hefty long-term debt of $4.5 billion, as
of March 31.
Weatherford International Ltd. (WFT) - reports July 25
Wall Street Expectations: Analysts polled by Thomson Reuters
recently expected a profit of 24 cents a share on $3.64 billion in
revenue, compared with 17 cents a share and $3.05 billion,
respectively, a year earlier.
Key Issues: Weatherford has described its second-quarter North
American revenue as "flat to up" as it continues to move operations
from natural gas fields, where activity is slowing, to more
profitable oil fields. The company also expects its international
segments' revenue to rise 20% and operating income to double in the
second half of the year as activity in China and Latin America
ramps up.
(The Thomson Reuters financial estimates and year-earlier
figures may not be comparable due to one-time items and other
adjustments.)
Write to Melodie Warner at melodie.warner@dowjones.com