Reuters: US oil services stocks surge on Schlumberger views
Fri Apr 18, 2008 8:36pm BST
NEW YORK, April 18 (Reuters) - A bullish outlook from Schlumberger Ltd (SLB.N: Quote, Profile, Research) propelled the oilfield services sector to record highs on Friday, just days ahead of earnings reports from several industry heavyweights.
Schlumberger reported disappointing first-quarter earnings, but Chief Executive and Chairman Andrew Gould said oil and gas companies were expected to pour more money into efforts to increase their output.
"It's more and more a year in which growth is going to strengthen significantly in the second half," Gould told analysts on a conference call.
A nearly four-year rally in oilfield services company stocks stalled at the end of 2007 as exploration activity in North America tailed off, prompting investors to sell off holdings in the sector on fears that energy producers were scaling back spending.
But as crude oil charged to record highs above $115 a barrel and natural gas prices rallied to a 27-month peak, industry sentiment is again turning bullish.
The Philadelphia Stock Exchange Oil Service Sector index gained 3.5 percent to 325.6 points, topping its previous record of 322.7 points from Dec. 31. That index sunk 27 percent in January, before rallying in March.
"I think what Schlumberger did today is confirm the long-term story in the service sector," said Jason Putnam, analyst at Victory Capital Management, with $65 billion in assets under management that include holdings in many oilfield service companies.
"This is giving investors more confidence that the (bullish) cycle is going to endure," he said.
Schlumberger shares rose 5.7 percent to $100.70 in late Friday trade, while rival Halliburton Co (HAL.N: Quote, Profile, Research), which is more reliant on North American `usiness, saw its shares climb to a new record of $46.92, up 4 percent. Halliburton is expected to report earnings on Monday.
Weatherford International Inc (WFT.N: Quote, Profile, Research), which also reports first-quarter earnings on Monday, rallied more than 6 percent to a new high of $84.77, while Baker Hughes Inc (BHI.N: Quote, Profile, Research), which reports on Tuesday, rose 4.2 percent to $80.59, a three-month high.
Smith International Inc (SII.N: Quote, Profile, Research), BJ Services Co (BJS.N: Quote, Profile, Research) and Noble Corp (NE.N: Quote, Profile, Research), which all report earnings next week, were between 2 percent and 6 percent higher.
U.S., CANADA WORRIES FADE
While energy investments in Asia, the Middle East and Russia have shown no signs of faltering in the past year, investors had worried that heavy spending in the United States and Canada would drop after several years of strong increases.
"I think what has really changed fundamentally here for the industry is that the outlook for North America is considerably better than it was at the beginning of the year," said Bill Herbert, analyst with investment bank and research firm Simmons & Co International.
The weekly count of the number of drilling rigs actively looking for oil or gas deposits in North America stood at 1,927, up 72 from the previous year, according to data compiled by Baker Hughes. (Reporting by Matt Daily, with additional reporting by Anna Driver in Houston; Editing by Braden Reddall)
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